The differential accumulation or loss of carbon and nutrients during decomposition can promote differentiation of wetland ecosystems, and contribute to landscape-scale heterogeneity. Tree islands are important ecosystems because they increase ecological heterogeneity in the Everglades landscape and in many tropical landscapes. Only slight differences in elevation due to peat accumulation allow the differentiation of these systems from the adjacent marsh. Hydrologic restoration of the Everglades landscape is currently underway, and increased nutrient supply that could occur with reintroduction of freshwater flow may alter these differentiation processes. In this study, we established a landscape-scale, ecosystem-level experiment to examine litter decomposition responses to increased freshwater flow in nine tree islands and adjacent marsh sites in the southern Everglades. We utilized a standard litterbag technique to quantify changes in mass loss, decay rates, and phosphorus (P), nitrogen (N) and carbon (C) dynamics of a common litter type, cocoplum (Chrysobalanus icaco L.) leaf litter over 64 weeks. Average C. icaco leaf degradation rates in tree islands were among the lowest reported for wetland ecosystems (0.23 ± 0.03 yr−1). We found lower mass loss and decay rates but higher absolute mass C, N, and P in tree islands as compared to marsh ecosystems after 64 weeks. With increased freshwater flow, we found generally greater mass loss and significantly higher P concentrations in decomposing leaf litter of tree island and marsh sites. Overall, litter accumulated N and P when decomposing in tree islands, and released P when decomposing in the marsh. However, under conditions of increased freshwater flow, tree islands accumulated more P while the marsh accumulated P rather than mineralizing P. In tree islands, water level explained significant variation in P concentration and N:P molar ratio in leaf tissue. Absolute P mass increased strongly with total P load in tree islands (r 2 = 0.81). In the marsh, we found strong, positive relationships with flow rate. Simultaneous C and P accumulation in tree island and mineralization in adjacent marsh ecosystems via leaf litter decomposition promotes landscape differentiation in this oligotrophic Everglades wetland. However, results of this study suggest that variation in flow rates, water levels and TP loads can shift differential P accumulation and loss leading to unidirectional processes among heterogeneous wetland ecosystems. Under sustained high P loading that could occur with increased freshwater flow, tree islands may shift to litter mineralization, further degrading landscape heterogeneity in this system, and signaling an altered ecosystem state.