Meeting the Paris Agreement’s temperature goals requires limiting future carbon emissions, yet current policies make temporarily overshooting the 1.5°C target likely. The potential climate feedback from destabilizing peatlands, storing large amounts of carbon, remains poorly quantified. Using the reduced-complexity Earth System Model OSCAR with an integrated peat carbon module, we found that across various overshoot pathways that temporarily exceed 1.5°C–2.5°C, northern peatlands exhibit net positive feedback, amplifying the overshoot challenge. Warming increases peatlands’ net carbon uptake, but this is largely offset by higher methane emissions. We estimated that for each 1°C increase in peak warming, the positive feedback from peatlands decreases the remaining carbon budget by 37 GtCO2 (22–48 GtCO2). If the 1.5°C temperature target is exceeded, peatlands would increase carbon removal requirement by about 40 GtCO2 (16–60 GtCO2) (8.6%). Our findings highlight the importance of properly accounting for northern peatlands for estimating climate feedbacks, especially under overshoot scenarios.