Previous research has shown that temporary employment is negatively associated with many psychological and job-related outcomes, such as well-being, health, wages, organisational commitment, and job satisfaction. Among recent doctoral graduates, the proportion of temporary contracts is particularly high. However, research on the association between contract type and job satisfaction specifically among doctoral graduates is scarce. Therefore, whether and how obtaining permanent employment affects doctoral graduates’ job satisfaction remains a notable research gap that we intend to narrow by using panel data from a recent doctoral graduation cohort and by adopting a panel research design. We examine what effect obtaining permanent employment has on doctoral graduates’ job satisfaction and whether this effect differs by labour market sector. We use panel data that are representative of the 2014 doctoral graduation cohort in Germany and their career trajectories up to five years after graduation. We apply fixed-effects regression to approximate the within-effect of obtaining a permanent employment contract on job satisfaction. The analyses indicate that obtaining permanent employment increases doctoral graduates’ job satisfaction and that this increase is not driven by time-varying confounders. We also find that doctoral graduates’ labour market sector moderates the effect: the increase in job satisfaction is highest in the academic sector and statistically significantly different from that in the private sector. Overall, this paper offers new insights into the effect of obtaining a permanent contract on the job satisfaction of recent doctoral graduates throughout their first years after graduation, when they are often employed on temporary contracts.