We present a decadal (1994–2004) record of carbon dioxide flux in a 160-year-old black spruce forest/veneer bog complex in central Manitoba, Canada. The ecosystem shifted from a source (+41 g C m−2, 1995) to a sink (−21 g C m−2, 2004) of CO2 over the decade, with an average net carbon balance near zero. Annual mean temperatures increased 1–2° during the period, consistent with the decadal trend across the North American boreal biome. We found that ecosystem carbon exchange responded strongly to air temperature, moisture status, potential evapotranspiration, and summertime solar radiation. The seasonal cycle of ecosystem respiration significantly lagged that of photosynthesis, limited by the rate of soil thaw and the slow drainage of the soil column. Factors acting over long time scales, especially water table depth, strongly influenced the carbon budget on annual time scales. Net uptake was enhanced and respiration inhibited by multiple years of rainfall in excess of evaporative demand. Contrary to expectations, we observed no correlation between longer growing seasons and net uptake, possibly because of offsetting increases in ecosystem respiration. The results indicate that the interactions between soil thaw and water table depth provide critical controls on carbon exchange in boreal forests underlain by peat, on seasonal to decadal time scales, and these factors must be simulated in terrestrial biosphere models to predict response of these regions to future climate.