Abstract East African wetlands are naturally dominated by papyrus, the world's fastest growing herbaceous plant, reaching up to 5 m in height and 3 kg m−2 of standing biomass per year. While its provisioning services are well-known, papyrus plays a less evident role in supporting tropical swamp ecosystems by controlling nutrient balances as well as hydrological flows, and through the provision of critical biotopes vital for the reproduction of insects, fishes and birds, including a small number of endemic species. Claims are made condemning papyrus for enhancing water loss, yet only few proper evapotranspiration studies have been carried out. Conflicting evidence indicates that papyrus swamps could be important in regulating local climate through evapotranspiration and hold significant potential in climate mitigation through carbon sequestration and carbon storage as peat. These benefits may become soon severely eroded because papyrus swamps are degrading rapidly due to direct exploitation, to agricultural encroachment, and to extensive trampling and feeding by cattle. We review papyrus ecosystem services, with a focus on its role on biodiversity enhancement and regulating functions. We present new evidence, showing an inverse temperature gradient within papyrus swamps, indicative of an optimised water retention capacity, with examples from Lake Naivasha and Lake Victoria. Better understanding of papyrus regulating services should underpin papyrus restoration as an ecohydrological tool to improve water quality, to moderate local climate by regulating the water cycle, to provide base material for a variety of provisioning ecosystem services, to enhance biotope structure and to support biodiversity.