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Tropical peat swamp forests retain large carbon stocks and support unique biodiversity, but clearance and drainage for agriculture have resulted in fires, carbon emissions and biodiversity losses. Initiatives to re-wet cultivated peatlands may benefit biodiversity if this protects remaining forests from fire and agricultural encroachment, but there are concerns that re-wetting could reduce yields and damage livelihoods, as relationships between drainage, on-farm biodiversity, and crop yields have not been studied. We examined oil palm fruit yields and bird diversity on 41 smallholder farms in Jambi (Sumatra, Indonesia), which varied in drainage intensity (12-month mean water table per plot from August 2018 to August 2019: −52 to −3 cm below-ground). We also compared farm bird diversity with a neighbouring area of protected peat swamp forest (11,000 ha, 21 plots; mean water table per plot −3 to +15 cm). Bird species richness (3–18 species per plot), species composition and oil palm yields (4.5–19.2 t fresh fruit bunch ha−1 year−1) varied among farms, but were not detectably affected by water table depth, although ground-level vegetation was more complex on wetter farms. Bird richness in oil palm (mean = 10.3 species per plot) was