Sphagnum farming aims to produce peat moss fibres for horticultural growing media or founder material for bog restoration. The objective of this study was to examine the establishment of Sphagnum on cut-over bog with shallow layers (average 78 cm) of highly decomposed “black peat” under different hydrological starting conditions. One of the two study sites in northwestern Germany was established directly after peat extraction, while the other one has been rewetted 7 years prior to its installation. Irrigation ditches were installed on these sites for water management. Sphagnum fragments were introduced and covered with straw mulch or geotextile for protection. The establishment of Sphagnum and the site conditions, including vascular plant growth, were evaluated to determine the supporting and limiting factors for Sphagnum farming under the difficult hydrological conditions of shallow highly decomposed peat (low porosity, low hydraulic conductivity). The cultivation of Sphagnum mosses is possible on shallow layers of highly decomposed peat. Sphagnum growth in cover and carpet thickness was significantly higher at the site that had previously been rewetted and had a thicker layer of residual peat. The areas covered with a geotextile showed significantly lower percentages of Sphagnum cover compared to those covered with straw mulch. While sufficient water quantity and quality are known to be prerequisites for Sphagnum farming, a sufficient peat layer thickness seems to be an additional factor for successful Sphagnum establishment and growth. Maintaining an optimal water table proved to be a challenge for these shallow layers of highly decomposed peat, as the low hydraulic conductivity of the peat has impeded a complete irrigation of the sites. Furthermore, the irrigation effort might need to be increased to compensate for additional water loss into the subsoil. On such sites with difficult hydrological and soil conditions, a favourable microclimate provided by vascular plants and a rewetted surrounding area can promote successful establishment of Sphagnum and can even partially counterbalance effects of a low water table.