Abstract. In pristine Sphagnum-dominated peatlands, (di)nitrogen (N₂) fixing (diazotrophic) microbial communities associated with Sphagnum mosses contribute substantially to the total nitrogen input, increasing carbon sequestration. The rates of symbiotic nitrogen fixation reported for Sphagnum peatlands, are, however, highly variable, and experimental work on regulating factors that can mechanistically explain this variation is largely lacking. For two common fen species (Sphagnum palustre and S. squarrosum) from a high nitrogen deposition area (25 kg N ha⁻¹ yr⁻¹), we found that diazotrophic activity (as measured by ^{15 − 15}N₂ labeling) was still present at a rate of 40 nmol N gDW⁻¹ h⁻¹. This was surprising, given that nitrogen fixation is a costly process. We tested the effects of phosphorus availability and buffering capacity by bicarbonate-rich water, mimicking a field situation in fens with stronger groundwater or surface water influence, as potential regulators of nitrogen fixation rates and Sphagnum performance. We expected that the addition of phosphorus, being a limiting nutrient, would stimulate both diazotrophic activity and Sphagnum growth. We indeed found that nitrogen fixation rates were doubled. Plant performance, in contrast, did not increase. Raised bicarbonate levels also enhanced nitrogen fixation, but had a strong negative impact on Sphagnum performance. These results explain the higher nitrogen fixation rates reported for minerotrophic and more nutrient-rich peatlands. In addition, nitrogen fixation was found to strongly depend on light, with rates 10 times higher in light conditions suggesting high reliance on phototrophic organisms for carbon. The contrasting effects of phosphorus and bicarbonate on Sphagnum spp. and their diazotrophic communities reveal strong differences in the optimal niche for both partners with respect to conditions and resources. This suggests a trade-off for the symbiosis of nitrogen fixing microorganisms with their Sphagnum hosts, in which a sheltered environment apparently outweighs the less favorable environmental conditions. We conclude that microbial activity is still nitrogen limited under eutrophic conditions because dissolved nitrogen is being monopolized by Sphagnum. Moreover, the fact that diazotrophic activity can significantly be upregulated by increased phosphorus addition and acid buffering, while Sphagnum spp. do not benefit, reveals remarkable differences in optimal conditions for both symbiotic partners and calls into question the regulation of nitrogen fixation by Sphagnum under these eutrophic conditions. The high nitrogen fixation rates result in high additional nitrogen loading of 6 kg ha⁻¹ yr⁻¹ on top of the high nitrogen deposition in these ecosystems.