The carbon isotope distribution in organic matter and siderite has been determined in the metalliferous (ferruginous) sediments of Santorini, Greece. The sediments were precipitated by the microaerophilic chemolithotrophic bacterium Galionella ferruginea from reduced hydrothermal solutions. In siderites precipitated due to high CO 2 fugacity the 13 C 12 C isotope ratio (PDB) was +6.5 permil, whereas the ratio was −26.8 permil in organic matter produced by the bacteria. The common occurrence of isotopically light carbon ( δ 13C = −10 permil PDB) in carbonates of banded iron formations (BIF's) was proposed some years ago to be the result of the “dilution” of carbon of marine carbonates by isotopically light carbon originally present in organic matter. The explanation for this dilution would be that Fe(III) in newly precipitated oxide hydroxides served as an electron acceptor during oxidation of the organic carbon to carbonate. The corresponding redistribution of some reduced carbon in the newly precipitated ferruginous sediment to carbonate minerals in the proportions found in some BIF's has been modelled in the present study. The isotopic shift to δ 13C = −11.2 permil of the carbonate minerals of such a dilution by carbon of biological origin is close to the values observed in the geological record. Therefore, organic matter appears to have been much more abundant during the early phases of BIF development. The association of gold and reduced organic carbon is well established in, for instance, the Witwatersrand-type conglomerates and some Archaean BIF's of hydrothermal origin. This association may, therefore, make it worthwhile evaluating once again the role of organic activity in the deposition of BIF's and their potential as a source of gold.