Globally, surface water quality and ecosystem functioning are challenged by anthropogenic P inputs. While sterner legislation has led to lower external P loading, internal loading fed by legacy P accumulated in the sediment has become the controlling factor of surface water P concentrations in many European freshwater systems. Fe amendment is a treatment method to control internal P loading, but is not always successful on the long term. In Lake Terra Nova, a polymictic shallow peat lake in the Netherlands, treatment with FeCl3 only led to a temporary decrease in sedimentary P release. Two years after treatment seasonal peaks in surface water P concentrations started to appear and have been increasing in intensity for the past 8 years. Depth-resolved solid phase analysis by sequential Fe and P extractions was combined with bulk X-ray absorption spectroscopy (XAS) at the Fe K-edge and high-resolution micro-X-ray fluorescence spectrometry (µ-XRF) and µ-XAS. At spots with distinctively high Fe contents, pyrite and silicate-bound Fe are identified by microscopic and spectroscopic analyses. The spectroscopic data, however, also point to a finely dispersed Fe species in the sediment matrix which most likely corresponds to Fe complexed by OM in the surface sediment. The correlation of the distribution of P and Fe suggests that P is bound to these Fe-OM complexes. This interpretation is supported by the sequential extraction results which showed that the Fe treatment induced a shift in the dominant P pool from Ca-bound P to Fe- and OM-bound P. Overall, the results indicate that FeCl3 application caused a change in sediment P dynamics towards a highly redox sensitive system in which P bound to Fe-OM is released to the surface water during seasonally low bottom water oxygen concentrations. The results of this study therefore indicate that FeCl3 may not be the ideal additive for the remediation of internal P loading in peaty water bodies due to the high affinity of Fe to OM.