Diatoms collected from 113 surface peat samples from the Boreal Shield and Hudson Plains show taxonomic distributions that are associated with macro-vegetation type, pH, and position relative to the water table, the main environmental variables measured in this study. The overall goal of our research was to determine the ecological distribution and response of diatoms to microhabitat conditions, and to assess the potential for diatoms to be applied as indicators of long-term environmental change in northern peatlands. Our results indicate that diatom assemblage composition was determined by both the broader peatland type (i.e., bog, rich and poor fens) and microhabitats within peatland formations (e.g., hummock, hollow). The diatom assemblages were primarily influenced by pH with the sites divided at a critical pH of 5.5, and secondarily by the depth to the water table. Acidic bog hollow and hummock microhabitats were species-poor and dominated almost exclusively by Eunotia paludosa A.Grunow and (or) Eunotia mucophila (H.Lange-Bertalot, M.Norpel-Schempp & E.Alles) H.Lange-Bertalot. These acidophilic and aerophilic diatom species were associated with the narrow pH optima of the dominant Sphagnum L. species (e.g., Sphagnum fuscum (Schimp.) Klinggr., Sphagnum angustifolium (C.E.O.Jensen ex Russow) C.E.O.Jensen) found in these bog habitats. Rich and poor fen samples, which were less acidic, supported a more diverse diatom assemblage (>30 species) with greater variability in both diatom and bryophyte pH tolerances. The diatom assemblages recorded in the bogs and fens of our study are similar to those found in peatlands around the world, demonstrating that diatom species are very specialized to exist in these often harsh semi-aquatic environments. Diatoms from peatlands have great potential as biomonitors of environmental change in these important ecosystems.