Globally, wetlands are in decline due to anthropogenic modification and climate change. Knowledge about the spatial distribution of biodiversity and biological processes within wetlands provides essential baseline data for predicting and mitigating the effects of present and future environmental change on these critical ecosystems. To explore the potential for environmental DNA (eDNA) to provide such insights, we used 16S rRNA metabarcoding to characterise prokaryote communities and predict the distribution of prokaryote metabolic pathways in peats and sediments up to 4m below the surface across seven New Zealand wetlands. Our results reveal distinct vertical structuring of prokaryote communities and metabolic pathways in these wetlands. We also find evidence for differences in the relative abundance of certain metabolic pathways that may correspond to the degree of anthropogenic modification the wetlands have experienced. These patterns, specifically those for pathways related to aerobic respiration and the carbon cycle, can be explained predominantly by the expected effects of wetland drainage. Our study demonstrates that eDNA has the potential to be an important new tool for the assessment and monitoring of wetland health.