Abstract Agricultural intensification has led to the loss of most natural wetlands from human‐dominated landscapes but, in recent decades, wetland restoration has gained traction worldwide. Restoration of suitable habitat conditions is hampered by nutrient residues from decades of high‐input farming, by continued input of nutrients from surrounding farmland and by incomplete restoration of natural hydrology. We assessed the effect of wetland restoration and disturbance (grazing) on vascular plant and bryophyte diversity in restored wetlands in Denmark at plot and landscape scales. Compared to near‐natural wetlands, we found a lower species richness and community uniqueness in restored wetlands, but we also found that grazing had a positive effect on vascular plant richness in restored wetlands. The size of the local species pool, presence of near‐natural habitat prior to restoration and near‐natural restored hydrology all had positive effects on plant diversity, whereas high soil iron and nitrogen had negative effects. Synthesis and applications: Restoration of plant diversity in wetlands is challenging, but our results point to potential remedies: plan restoration areas near colonisation sources of the target biota, restore hydrology to near‐natural conditions, discontinue nutrient loads from surrounding arable land and restore near‐natural grazing regimes. Bryophytes may be particularly useful as indicators for successful restoration of wetlands.