Study Region: The mountainous catchments in the Australian Alps are one of the highest water-yielding regions within a generally dry continent. Peatlands are critical water-regulating components of these catchments, and their response to a changing climate will impact all downstream environments and water availability for human uses. Study Focus: Mountain peatland ecohydrology, and in particular the role of evapotranspiration, remains incompletely understood. This study focused on evapotranspiration and biogeochemical regulation of “Alpine Sphagnum Bogs”, with a case study at Watchbed Creek peatland. Eddy covariance was used to quantify evapotranspiration and combined with Penman-Monteith-based evapotranspiration to calculate an ‘ecosystem vegetation coefficient’ (KESV). Base-flow evapotranspiration and analyses of Cl−, Na+, Ca2+ and Mg2+ in peatland stream water were used to assess biogeochemical processes. New Hydrological Insights for the Region: This work demonstrates that evapotranspiration is a major component of the water budget, 26% of annual precipitation. Further, we show how KESV calculated from direct measurements at one site may enable evapotranspiration to be modelled for other mountain catchments. The seasonally dependent nature of the biogeochemical regulation processes observed in this mountain peatland can be used as a reference to evaluate the condition of peatlands under similar synoptic weather conditions. In practice, this means that mountain ecosystem restoration can now be informed by a better understanding of the ecohydrology of these critical high mountain catchments.