The tropical peat swamps of Indonesia cover 20 million hectares and may contain as much as 15% of the global peatland carbon pool, representing a significant terrestrial store for this element. Most of the carbon in tropical peatlands is located in below-ground biomass (i.e. within the peat itself) and not above ground (in peat swamp forest or derived vegetation types). Net carbon accumulation is favoured by high effective rainfall and waterlogged soils, but any persistent environmental change, particularly decrease in wetness, will result in peat mineralisation and release of stored carbon. Records of late Pleistocene and early Holocene peat accumulation from several sites across Southeast Asia indicate that periods of rapid peat formation were interspersed with periods of peat decomposition and loss, attributed to changes in climate and sea level and, in some cases, to fire. This suggests that the large reservoir of organic carbon within tropical peatlands has acted, at various times throughout the Late Quaternary, both as a sink and a source of atmospheric carbon. In recent decades, changing land management practices on the peatlands of Indonesia have greatly increased their susceptibility to degradation and to fire. The fires of 1997, which affected extensive peatland areas in Kalimantan and Sumatra, illustrated this and also emphasised the contemporary role of the tropical peatland ecosystem in the global carbon cycle. By using satellite imagery and ground measurements within a 2.5 million hectare study area in Central Kalimantan, we determined that the 1997 fires resulted in the release of between 0.19 and 0.23 Gt (billion tonnes) carbon to the atmosphere through peat combustion, representing a loss of up to 8% of the peat carbon store. By extrapolating these results to the total area of burned peatland in Indonesia, we estimated that between 0.81 and 2.57 Gt of carbon could have been released from ground and surface fires, contributing to a large pulse in atmospheric carbon dioxide. The current and future roles of tropical peatlands in terrestrial carbon storage will be discussed.