Indonesia is the home of the largest tropical peatland in the world with a total area of 13,43 million hectares which provides multiple ecosystem services essential for climate and water regulation, home to flora and fauna biodiversity, and livelihoods of local communities. However, Indonesian peatland has undergone land use transformation from forest to other land use systems, especially, agricultural systems. Further, peatland mismanagement has led to an increase in emissions, fires occurrence, and soil subsidence that cause environmental and economic problems and health issues. Indonesia pledged to restore nearly 2,5 million hectares of degraded peatland through three approaches: Rewetting, Revegetation, and Revitalization (3R). This study aims to present the potential of agrosilvofishery as a climate-smart peatland management model, to improve ecosystem services and livelihoods from degraded peatlands. Early findings from a 3 hectares trial plot of agrosilvofishery model in Perigi, Ogan Komering Ilir, South Sumatera province, show that potential accumulative avoided emission from fire and revegetation is about 217 tCO2e^-ha in 30 years. Additional direct economic benefits are from food crops and fish, such as paddy, pineapple, and medicine plants. However, the model requires capital and technical support to overcome capacity constraints. Uncertain climate leading to drought and flooding significantly affects tree growth and food crop production. In addition, the pest is also a challenge to fish and food production if the practice only locates in small areas. Expansion of large-scale agricultural plantations is indicated leading to changes in water conditions in agrosilvofishery areas which affect tree growth and food production as well.  Adopting agrosilvofishery for climate and livelihoods improvement, therefore, requires investment support from the government or private sectors as well as collaboration among stakeholders on the landscapes.