AbstractThe significance of rewetting peatlands, as a key instrument for peatland protection and response to climate change, is increasingly recognized by both experts and the public. Its widespread implementation however still faces numerous challenges. Characteristics of the issue itself as well as the corresponding policies transform the issue into a wicked problem. Showcasing the lack of clarity in funding structures at the German national and federal‐state levels highlights the linked obstruction of necessary actions, implementation options, and financial resources for peatland protection. This poses challenges to climate protection, adaptation efforts, and the achievement of related Sustainable Development Goals. In Germany, an update of peatland protection policies highlights the structural challenges in coordinating peatland protection efforts and helps identify gaps and opportunities. A mixed methods approach is used to analyze both strategic documents and the results of a survey on associated funding. The results indicate a multi‐level policy structure with several German federal states recognizing the potential and relevance of peatland protection but still facing obstacles regarding the distribution of responsibilities, data availability, and overall structures. Recognizing peatland protection as a wicked problem can highlight research gaps and help in developing individual solutions that can be transferred to an international level.