While existing moratoria in Indonesia and Malaysia should preclude continued large-scale expansion of palm oil production into new areas of South-East Asian tropical peatland, existing plantations in the region remain a globally significant source of atmospheric carbon due to drainage driven decomposition of peatland soils. Previous studies have made clear the direct link between drainage depth and peat carbon decomposition and significant reductions in the emission rate of CO2 can be made by raising water tables nearer to the soil surface. However, the impact of such changes on palm fruit yield is not well understood and will be a critical consideration for plantation managers. Here we take advantage of very high frequency, long-term monitoring of canopy-scale carbon exchange at a mature oil palm plantation in Malaysian Borneo to investigate the relationship between drainage level and photosynthetic uptake and consider the confounding effects of light quality and atmospheric vapour pressure deficit. Canopy modelling from our dataset demonstrated that palms were exerting significantly greater stomatal control at deeper water table depths (WTD) and the optimum WTD for photosynthesis was found to be between 0.3 and 0.4 m below the soil surface. Raising WTD to this level, from the industry typical drainage level of 0.6 m, could increase photosynthetic uptake by 3.6 % and reduce soil surface emission of CO2 by 11 %. Our study site further showed that despite being poorly drained compared to other planting blocks at the same plantation, monthly fruit bunch yield was, on average, 14 % greater. While these results are encouraging, and at least suggest that raising WTD closer to the soil surface to reduce emissions is unlikely to produce significant yield penalties, our results are limited to a single study site and more work is urgently needed to confirm these results at other plantations.