Summary Ericaceous shrubs adapt to the nutrient‐poor conditions in ombrotrophic peatlands by forming symbiotic associations with ericoid mycorrhizal (ERM) fungi. Increased nutrient availability may diminish the role of ERM pathways in shrub nutrient uptake, consequently altering the biogeochemical cycling within bogs. To explore the significance of ERM fungi in ombrotrophic peatlands, we developed the model MWMmic (a peat cohort‐based biogeochemical model) into MWMmic‐NP by explicitly incorporating plant‐soil nitrogen (N) and phosphorus (P) cycling and ERM fungi processes. The new model was applied to simulate the biogeochemical cycles in the Mer Bleue (MB) bog in Ontario, Canada, and their responses to fertilization. MWMmic_NP reproduced the carbon(C)–N–P cycles and vegetation dynamics observed in the MB bog, and their responses to fertilization. Our simulations showed that fertilization increased shrub biomass by reducing the C allocation to ERM fungi, subsequently suppressing the growth of underlying Sphagnum mosses, and decreasing the peatland C sequestration. Our species removal simulation further demonstrated that ERM fungi were key to maintaining the shrub–moss coexistence and C sink function of bogs. Our results suggest that ERM fungi play a significant role in the biogeochemical cycles in ombrotrophic peatlands and should be considered in future modeling efforts.