X‐ray diffraction spectra of freeze‐dried sediments from a lake in the English Lake District positively identified the presence of greigite, a magnetic iron sulfide (Fe3S4) mineral. The sediments also show considerable loss of magnetic intensity when wet samples are allowed to oxidize. Several hypotheses have been proposed elsewhere to explain the intensity loss, but an assessment of the evidence suggests that oxidation of greigite is responsible in these sediments.Data from several lakes and from laboratory experiments are used to deduce the environmental requirements for greigite formation. These conditions of high labile C concentrations, good sources of labile Fe and S, and an oscillating oxycline depth in the sediments are likely to be found only in mono‐ or dimictic eutrophic lakes, estuaries, and salt marshes and are unlikely to be found in meromictic lakes, unstratified lakes, oligotrophic lakes, or deep‐sea sediments.