Permafrost in peatlands strongly influences ecosystem characteristics, including vegetation composition, hydrological functions, and carbon cycling. Large amounts of organic carbon are stored in permafrost peatlands in northwestern Canada. Their possible degradation into permafrost-free wetlands including thermokarst bogs may affect carbon (C) stocks, but the direction and magnitude of change are uncertain. Using peat core reconstructions, we characterized the temporal and spatial variability in vegetation macrofossil, testate amoebae, C content, and peat decomposition along a permafrost thaw chronosequence in the southern portion of the Scotty Creek watershed near Fort Simpson, Northwest Territories. The accumulation of limnic and minerotrophic peat prevailed at the site until permafrost formed around 5000 cal. yr BP. Three distinct permafrost periods were identified in the permafrost peat plateau profile, while permafrost only aggraded once in the thermokarst bog profile. Permafrost thawed at ~550 and ~90 cal. yr BP in the thermokarst bog center and edge, respectively. Both allogenic (climatic shifts and wildfire) and autogenic (peat accumulation, Sphagnum growth) processes likely exerted control on permafrost aggradation and thaw. While apparent carbon accumulation rates (ACARs) were lower during present and past permafrost periods than during non-permafrost periods, long-term C accumulation remained similar between cores with different permafrost period lengths. Deep peat was less decomposed in the permafrost plateau compared with the thermokarst bog, which we speculate is due more to differences in peat type rather than differences in decomposition environment between these two ecosystem states. Our study highlights the importance of considering potential deep peat C losses to project the fate of thawing permafrost peat C stores.