Microfungi were isolated from living and decomposing Sphagnum fuscum from a southern boreal bog in Alberta, Canada. Fifty-five fungi (three ascomycetes, three basidiomycetes, 11 zygomycetes, 28 Fungi Imperfecti, 10 unnamed mycelia sterilia) are described in this study. Of the Fungi Imperfecti, 21 species have known sexual states (teleomorph) in the Ascomycota, while the remaining seven species are known only from their asexual state (anamorph) and could not be assigned to specific teleomorphic families. Thirty-six species represent new records from Sphagnum and 45 species are new records for S. fuscum. Nearly 52% of the 45 identified fungi originated from three families, Mortierellaceae (10 taxa, Zygomycota), Trichocomaceae (8 taxa, Ascomycota), and Hypocreaceae (5 taxa, Ascomycota), with the remaining fungi representing 12 additional families. The 55 fungi have the ability to utilize a variety of carbon sources, such as cellulose, tannic acid, and pectin, and thus are important organisms involved the mineralization of carbon in peatlands.