We present a record of peatland development in relation to climate changes and human activities from the Palomaa mire, a remote site in northern Finland. We used fine-resolution and continuous sampling to analyse several proxies including pollen (for vegetation on and around the mire), testate amoebae (TA; for mire-wetness changes), oxygen and carbon isotopes from Sphagnum cellulose (δ18O and δ13C; for humidity and temperature changes), peat-accumulation rates and peat-colour changes. In spite of an excellent accumulation model (30 14C dates and estimated standard deviation of sample ages <1 year in the most recent part), the potential to determine cause–effect (or lead–lag) relationships between environmental changes and biotic responses is limited by proxy-specific incorporation processes below the actively growing Sphagnum surface. Nevertheless, what emerges is that mire development was closely related to water-table changes rather than to summer temperature and that water-table decreases were associated with increasing peat-accumulation rates and more abundant mire vegetation. A rapid fen-to-bog transition occurred within a few years around AD 1960 when the water table decreased beyond the historical minimum, supporting the notion that mires can rapidly shift into bogs in response to allogenic factors. Copyright © 2012 John Wiley & Sons, Ltd.