A relevant part of the geotechnical infrastructure in the north of Europe and overseas is built on soft organic soils, including peat. Peat is extremely vulnerable to climate-related hazards as increased temperature accelerates drying, shrinkage and decomposition of the organic matter. Peat exhibits dramatic changes in volume with changes in water content. As the material deforms, the pore space evolves and changes the water retention response. The evolution of the pore space leads to a hysteretic relationship between suction, water content, and void size distribution. In this work, data from free shrinkage-swelling and suction measurements on natural fibrous peat subjected to drying and wetting cycles are presented and discussed. The water retention and shrinkage behaviour of the samples are modelled by accounting for capillarity and considering the evolution of the pore size distribution. X-Ray computer tomography was used to explore the change in the pore space upon shrinkage and drying. The experimental evidence shows that peat experiences distinct shrinkage zones including one where accelerated contraction occurs. Such behaviour is explained as a consequence of the interactions of an aggregated fabric. This is supported by the conceptual modelling approach that highlights the pivotal role of the evolving pore space.