Freshwater lakes and reservoirs play a disproportionate role in the global carbon budget, sequestering more organic carbon (OC) than ocean sediments each year. However, it remains unknown how global declines in bottom-water oxygen concentrations may impact OC sequestration in freshwater sediments. In particular, associations between OC and iron (Fe) are hypothesized to play a critical role in stabilizing OC in sediment, and these complexes can be sensitive to changes in oxygen. Under low-oxygen (hypoxic) conditions, Fe-bound OC (Fe-OC) complexes may dissociate, decreasing OC sequestration. However, rates of OC respiration are also lower under hypoxic conditions, which could increase OC sequestration. To determine the net effects of hypoxia on OC and Fe cycling over multiple timescales, we paired whole-ecosystem experiments with sediment incubations in two eutrophic reservoirs. Our experiments demonstrated that short (2–4 week) periods of hypoxia can increase Fe and OC concentrations in the water column while decreasing OC and Fe-OC in sediment by 30%. However, exposure to seasonal hypoxia over multiple years was associated with a 57% increase in sediment OC and no change in Fe-OC. These results indicate that the large sediment Fe-OC pool (~30% of sediment OC) contains both oxygen-sensitive and oxygen-insensitive fractions, and over multiannual timescales, OC respiration rates play a greater role than Fe-OC protection in determining the effect of hypoxia on sediment OC content. Consequently, we anticipate that global declines in oxygen concentrations will alter OC and Fe cycling, with the direction and magnitude of effects depending upon the duration of hypoxia.