Thermophilic (55 degrees C) anaerobic digestion of wastewaters from wet carbonization of Minnesota peat was conducted in a simple, upflow digester at an HRT of one day to provide a methane yield of 0.20 SCM/kg VS added and a BOD5 reduction of 85%. Carbonization of Maine peat conducted for a much longer duration of thermal treatment produced recalcitrant and potentially toxic end products that reduced the biodegradability of wastewaters. Methane fermentation of the Maine-peat wet-carbonization waste was inhibited at an HRT of one day in the single-stage digester. However, two-phase digestion with separate acid-phase fermentation to promote hydrolytic degradation of toxic end products followed by separate methane fermentation at an HRT of 2 days exhibited a methane yield of 0.21 SCM/kg VS added and a BOD5 reduction of 76%. Volatile fatty acids profiles along the depths digesting cultures indicated that single-stage and two-phase digestion could be accomplished at one-half the reactor residence times (one day for single-stage and three days for two-phase) used in this research.