This study deals with changes in the plant cover and its net carbon sequestration over 30 years on a subarctic Sphagnum-mire with permafrost near Abisko, northernmost Sweden, in relation to climatic variations during the same period. Aerial colour infrared images from 1970 and 2000 were compared to reveal changes in surface structure and vegetation over the whole mire, while the plant populations were studied within a smaller, mainly ombrotrophic part. The results demonstrated two processes, namely (1) that wet sites dominated by graminoids expanded while hummock sites dominated by dwarf shrubs receded, and (2) that on the hummocks lichens expanded while evergreen dwarf shrubs and mosses decreased, both processes creating an instability in the surface structure. A successive degradation of the permafrost is the likely reason for the increase in wet areas, while the changes in the hummock vegetation might have resulted from higher spring temperatures giving rise to an intensified snow melt, exposing the vegetation to frost drought. Because of the vegetation changes, the annual litter input of carbon to the mire has increased slightly, by 4 g m−2 a−1 (7.3%), over these years while an increased erosion has resulted in a loss of 40–80 Mg carbon or 7–17 g m−2 a−1 for the entire mire over the same period. As the recalcitrant proportion of the litter has decreased, the decay rate in the acrotelm might be expected to increase in the future.