Freshwater lakes and reservoirs play a disproportionate role in the global organic carbon (OC) budget, as active sites for carbon processing and burial. Associations between OC and iron (Fe) are hypothesized to contribute substantially to the stabilization of OC in sediment, but the magnitude of freshwater Fe‐OC complexation remains unresolved. Moreover, global declines in bottom‐water oxygen concentrations have the potential to alter OC and Fe cycles in multiple ways, and the net effects of low‐oxygen (hypoxic) conditions on OC and Fe are poorly characterized. Here, we measured the pool of Fe‐bound OC (Fe‐OC) in surficial sediments from two eutrophic reservoirs, and we paired whole‐ecosystem experiments with sediment incubations to determine the effects of hypoxia on OC and Fe cycling over multiple timescales. Our experiments demonstrated that short periods (2–4 weeks) of hypoxia can increase aqueous Fe and OC concentrations while decreasing OC and Fe‐OC in surficial sediment by 30%. However, exposure to seasonal hypoxia over multiple years was associated with a 57% increase in sediment OC and no change in sediment Fe‐OC. These results suggest that the large sediment Fe‐OC pool (∼30% of sediment OC in both reservoirs) contains both oxygen‐sensitive and oxygen‐insensitive fractions, and over multiannual timescales OC respiration rates may play a more important role in determining the effect of hypoxia on sediment OC than Fe‐OC dissociation. Consequently, we anticipate that global declines in oxygen concentrations will alter OC and Fe cycling, with the direction and magnitude of effects dependent upon the duration of hypoxia.