We studied the role that submersed aquatic vegetation (SAV) plays in the sedimentation of organic matter (OM) and phosphorus (P) in Lake Panasoffkee, Florida (USA), a shallow, hard-water, macrophyte-dominated water body. Carbon/Nitrogen ratios (C/N) and stable isotope signatures (δ¹³C and δ¹⁵N) in algae, higher plants, and surface sediments were measured to identify sources of OM to the lake mud. Pollen, plant macrofossils, and geochemistry in sediment cores indicated that primary productivity and SAV abundance in Lake Panasoffkee increased in the late 1800s, probably as a response to increased P loading from human settlement and forest clearance. SAV and associated periphyton served as temporary sinks for soluble P, maintaining relatively clear-water, low-nutrient conditions in the lake. P accumulation in Lake Panasoffkee sediments increased together with indicators for greater SAV presence. This suggests that SAV and associated epiphytes promote P burial and retention in sediments. Although it might be assumed that rooted submersed macrophytes are directly responsible for P uptake from water and transfer to sediments, C/N and stable carbon isotope results argue for the importance of other macrophyte growth forms, and perhaps epiphytic algae, in permanent OM and P sequestration. For instance, high rates of photosynthesis by epiphytes in hard-water systems consume CO₂ and promote CaCO₃ precipitation. Sloughing of accumulated carbonates from macrophyte leaves transfers epiphytes and associated P to the sediment. Our paleolimnological findings are relevant to restoration efforts in the Florida Everglades and support the claim that constructed SAV wetlands remove P from waters effectively.