This study investigates land use and land cover changes across Indonesia’s peatlands from 2000 to 2022. Although peatlands occupy only about 2.84% of the global land surface, they store disproportionately large carbon stocks, with global peatland estimates ranging from 3.9 to 4.4 million km2. Tropical peatlands account for approximately 360.000–400.000 km2, of which around 250.000 km2 occur in Southeast Asia. Indonesia contains the largest share in the region, storing an estimated 55–57 Gt of carbon. Despite these critical ecological and climatic functions, Indonesian peatlands have experience extensive degradation driven by agricultural expansion, timber extraction and drainage-induced fires. Using PEATMAP to delineate peat distribution and Mapbiomas data to quantify land use transitions, this study analyses forest loss and the expansion of agriculture, particularly oil palm. Results indicate that forest cover on peatlands declined by approximately 19,495 km2 over the past two decades, with agriculture emerging as the dominant replacement land use. Indonesia’s peatlands are distributed across Sumatra (42.8%), Kalimantan (32.9%) and Papua (24.2%). Sumatra experienced the highest forest loss (~13.928 km2), followed by Kalimantan (~5.460 km2) and Papua (~107 km2). While Sumatra was 66.87% agriculture-dominated in 2022, Kalimantan exhibited the strongest correlation between forest decline and Oil Palm expansion (r = −0.997), compared with weaker correlation in Sumatra (r = −0.53) and Papua (r = − 0.86). Major conversions in Sumatra occurred predominantly before 2000, accelerated in Kalimantan after 2005–2007 and remain limited in Papua. These findings demonstrate substantial ongoing forest-to-agriculture conversion, increasing carbon-emissions risks and underscoring the need for strong protection measures, particularly for the still-intact peatlands of Papua.