Wetlands and flooded peatlands can sequester large amounts of carbon (C) and have high greenhouse gas mitigation potential. There is growing interest in financing wetland restoration using C markets; however, this requires careful accounting of both CO2 and CH4 exchange at the ecosystem scale. Here we present a new model, the PEPRMT model (Peatland Ecosystem Photosynthesis Respiration and Methane Transport), which consists of a hierarchy of biogeochemical models designed to estimate CO2 and CH4 exchange in restored managed wetlands. Empirical models using temperature and/or photosynthesis to predict respiration and CH4 production were contrasted with a more process-based model that simulated substrate-limited respiration and CH4 production using multiple carbon pools. Models were parameterized by using a model-data fusion approach with multiple years of eddy covariance data collected in a recently restored wetland and a mature restored wetland. A third recently restored wetland site was used for model validation. During model validation, the process-based model explained 70% of the variance in net ecosystem exchange of CO2 (NEE) and 50% of the variance in CH4 exchange. Not accounting for high respiration following restoration led to empirical models overestimating annual NEE by 33–51%. By employing a model-data fusion approach we provide rigorous estimates of uncertainty in model predictions, accounting for uncertainty in data, model parameters, and model structure. The PEPRMT model is a valuable tool for understanding carbon cycling in restored wetlands and for application in carbon market-funded wetland restoration, thereby advancing opportunity to counteract the vast degradation of wetlands and flooded peatlands.