Increasing dominance by purple moor grass, Molinia caerulea (‘Molinia’) on globally rare and protected blanket bogs of the United Kingdom and the South Pennines is a growing threat to diversity and carbon storage, as well as increasing the risk of wildfire. In a trial to increase diversity using Sphagnum plugs planted on three Molinia‐dominated sites in the South Pennines, an initial rapid increase in cover of plug‐derived Sphagnum (PDS) suggested an advantage over that of naturally occurring Sphagnum colonies, the latter remaining below 1% cover throughout; subsequent plateauing of PDS cover in areas of moderate Molinia cover (<80%) was linked with drought stress, whereas declining cover in Molinia‐dense areas (>80%) suggested additional competition for light. The cover of Molinia was only weakly reduced by, and then completely recovered from, a baseline flailing treatment. Increasing cover of PDS in all of the treatments had no clear effect on the cover of Molinia. The cover of naturally occurring indicator species was strongly reduced by the baseline flailing treatment; subsequent recovery was not complete, even with contributions by PDS. There was a negative linear relationship between Molinia cover and indicator species cover, over all ranges of Molinia cover. Water table depths were lowered by PDS during the first 3 years of the trial, perhaps due to facilitated capillary conduction of water through the buried plug tissues. It was concluded that PDS can establish rapidly amongst Molinia, boosting the diversity and cover of indicator species, but that establishment is slower in areas of dense Molinia and also likely to be hampered by periods of severe drought stress. Prior flailing had no clear benefit on the growth of PDS but reduced the cover of naturally occurring indicator species. Further investigations should include the role of water stress, shading and phosphorus limitation in restricting the growth of PDS within Molinia‐dominated swards.

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