The ISO LWS far-infrared spectrum of the ultraluminous galaxy Mrk 231 shows OH and H 2 O lines in absorption from energy levels up to 300 K above the ground state, and emission in the [O i] 63 m and [C ii] 158 m lines. Our analysis shows that OH and H 2 O are radiatively pumped by the far-infrared continuum emission of the galaxy. The absorptions in the high-excitation lines require high far-infrared radiation densities, allowing us to constrain the properties of the underlying continuum source. The bulk of the far-infrared continuum arises from a warm (T dust ¼ 70 100 K), optically thick ( 100 m ¼ 1 2) medium of effective diameter 200-400 pc. In our best-fit model of total luminosity L IR , the observed OH and H 2 O high-lying lines arise from a luminous (L/L IR $ 0:56) region with radius $100 pc. The high surface brightness of this component suggests that its infrared emission is dominated by the AGN. The derived column densities N (OH) k 10 17 cm À2 and N (H 2 O) k 6 ; 10 16 cm À2 may indicate X-ray dominated region (XDR) chemistry, although significant starburst chemistry cannot be ruled out. The lower-lying OH, [C ii] 158 m, and [O i] 63 m lines arise from a more extended ($350 pc) starburst region. We show that the [C ii] deficit in Mrk 231 is compatible with a high average abundance of C + because of an extreme overall luminosity to gas mass ratio. Therefore, a [C ii] deficit may indicate a significant contribution to the luminosity by an AGN, and/or by extremely efficient star formation.