Northern peatlands contain enormous quantities of organic carbon within a few meters of the atmosphere and play a significant role in the planetary carbon balance. We have developed a new, process-oriented model of the contemporary carbon balance of northern peatlands, the Peatland Carbon Simulator (PCARS). Components of PCARS are (1) vascular and nonvascular plant photosynthesis and respiration, net aboveground and belowground production, and litterfall; (2) aerobic and anaerobic decomposition of peat; (3) production, oxidation, and emission of methane; and (4) dissolved organic carbon loss with drainage water. PCARS has an hourly time step and requires air and soil temperatures, incoming radiation, water table depth, and horizontal drainage as drivers. Simulations predict a complete peatland C balance for one season to several years. A 3-year simulation was conducted for Mer Bleue Bog, near Ottawa, Ontario, and results were compared with multiyear eddy covariance tower CO2 flux and ancillary measurements from the site. Seasonal patterns and the general magnitude of net ecosystem exchange of CO2 were similar for PCARS and the tower data, though PCARS was generally biased toward net ecosystem respiration (i.e., carbon loss). Gross photosynthesis rates (calculated directly in PCARS, empirically inferred from tower data) were in good accord, so the discrepancy between model and measurement was likely related to autotrophic and/or heterotrophic respiration. Modeled and measured methane emission rates were quite low. PCARS has been designed to link with the Canadian Land Surface Scheme (CLASS) land surface model and a global climate model (GCM) to examine climate-peatland carbon feedbacks at regional scales in future analyses.