Mangrove restoration projects are now widely established, aiming to regain the carbon benefit of the mangrove ecosystem that is essential for climate change mitigation. This study aimed to investigate mangrove litter as the source of carbon in restored mangrove forests in Perancak Estuary, Bali, Indonesia, which previously experienced substantial mangrove loss due to shrimp aquaculture development. We assessed the production and decomposition of mangrove litter and associated macrozoobenthic biodiversity in restored forests with plantation age ≥14 years and intact mangrove forests as the reference. The monthly production of three groups of mangrove litter (leaf, reproductive, and wood) was assessed over 12 months. A leaf litter decomposition experiment was performed to inspect the interspecific and disturbance history variation in organic matter formation among four major mangrove species: Rhizophora apiculata, Bruguiera gymnorhiza, Avicennia marina, and Sonneratia alba. Our results showed that annual litterfall production from restored and intact mangroves in Perancak Estuary were 13.96 and 10.18 Mg ha−1 year−1, which is equivalent to approximately 6282 and 4581 kg C ha−1 year−1 of annual litterfall carbon sink, respectively. Although restored mangroves had significantly higher plant litterfall production than intact mangroves, no significant difference was detected in leaf litter decomposition and macrozoobenthic biodiversity between these forest types.