As compared with mineral soils, there are few in situ measurements of the unsaturated hydraulic properties of peat soils available. We used parameter estimation (inverse) methods to estimate the water retention and hydraulic conductivity functions of drained peat soils from both laboratory and field data. The laboratory data were obtained on small cores using the traditional evaporation method, while the field data were obtained by means of evaporation experiments using groundwater lysimeters with and without vegetation. The field experiments without vegetation produced highly uncertain parameters and were limited to a relatively small pressure head range. Better results were obtained for the lysimeter with a grass cover that caused the peat soil to dry out more. However, a physically realistic minimum in the objective function for the plant-covered lysimeter could be found only when prior information about several parameters was included in the optimization. Good agreement was obtained between the laboratory and field measurements. The hydraulic functions were subsequently tested by comparing forward simulations with independently measured pressure heads and water contents of an additional lysimeter experiment under grass. The dynamics of the drying process was described well using the optimized soil hydraulic properties.