Drainage and cultivation of peat soils almost always result in rapid soil degradation and a loss of soil organic matter (SOM). Winter cover crop cultivation and subsequent incorporation and watertable elevation have been considered as potential strategies to improve soil quality and decrease nutrient loss in drained and cultivated peatlands. However, the combined effect of residue incorporation and watertable management on greenhouse gas (GHG) emissions in these highly productive fen peat soils remains unknown. In the present study, two winter cover crops with contrasting carbon/nitrogen ratios (vetch [Vicia sativa], 45–60; rye [Secale cereale], 13–14) were incorporated into peat soils as green manure (without extra synthetic/organic N addition) at two watertable depths (−50 and −30 cm). Our results showed that fast mineralization of incorporated residues can cause a large pulse of GHG release under favourable environmental conditions. Both vetch and rye incorporation increased CO2 emissions compared with the bare soil treatments due to labile C addition and removal of N constraints. However, the two cover crops had strongly contrasting effects on N2O emissions. Incorporation of low C/N ratio vetch stimulated N2O emissions (average 21.8 ± 7.3 mg N m−2 hr−1) compared with the bare soil treatments, whereas high C/N ratio rye decreased N2O emissions (average 0.09 ± 0.03 mg N m−2 hr−1). Raising the watertable slightly reduced CO2 emissions from an average of 1.3 ± 0.4 (the bare soils) to 0.9 ± 0.3 g C m−2 hr−1 by inhibiting SOM mineralization but significantly increased N2O emissions in the vetch treatments by stimulating denitrification. CH4 fluxes were not affected by watertable depth, and their contribution to total global warming potential was negligible. Therefore, we conclude that high C/N ratio cover crops (e.g., rye) in combination with a raised watertable may represent a viable management option to mitigate GHG fluxes in fen peat soils.