The Mecklenburg Bight (Western Baltic Sea) near Luebeck, Germany was historically used to dump industrial waste at sea and, thus, sediments in some regions are highly polluted at present. While earlier studies identified hot spots of chemical pollution, little is known about biological activities and impacts on exposed marine organisms. This study aimed to assess the pollution in the Mecklenburg Bight to determine the degree of contamination with sediment-bound polycyclic aromatic hydrocarbons (PAHs) as well as biological activities. Sediment cores with a depth of 30 cm were sampled at a dumping site and at a reference site, sliced in distinct layers, freeze-dried, and processed using the accelerated solvent extraction method. Sediment was characterized measuring total organic carbon (TOC) and soot contents. Concentrations of the 16 EPA-PAHs were determined with chemical analysis (gas chromatography–mass spectroscopy) in each sediment slice and referred to the determined TOC content. Further on, in vitro biotests were applied to determine toxic effects of contaminants in the sediment. The acute neutral red retention assay indicated no specific cytotoxic effects. Arylhydrocarbon receptor (AhR)-mediated activities were measured using the mechanism-specific 7-ethoxyresorufin-O-deethylase induction assay. Both biotests were performed with rainbow trout (Oncorhynchus mykiss) liver cells (RTL-W1). Analyzed compound concentrations and biological activities were given in toxicological equivalent concentrations (chem- and bio-TEQs) to determine shares of analyzed EPA-PAHs to the overall activity. TOC and soot contents indicated a significant alteration through the sediment core at the dumping site. EPA-PAH concentrations were referred to TOC and indicated elevated concentrations at the dumping site. Maximum PAH concentrations (14 to 16 cm depth; 5.44 µg/g TOC) were 300-fold increased at the dumping site, compared to the reference site (4 to 6 cm depth; 0.017 µg/g TOC). Cytotoxicity as determined in the neutral red retention assay was elevated in some layers at the dumping site (maximum in 4 to 6 cm depth; NR50 = 14 mg/ml), but not correlated with TOC or soot contents. Ah receptor agonist activities were clearly elevated in highly PAH-loaded layers at both sites. At the dumping site, maximum activities were determined reflected by a bio-TEQ of 223,000 pg/g (19 to 22 cm), in contrast to a bio-TEQ of 41,000 pg/g (6 to 8 cm) at the reference site. Further on, shares of EPA-PAHs to the overall activity were determined and contributed >40% at the dumping site and between 4% and 17% at the reference site. Chem-TEQs were found to exceed bio-TEQs in a depth of 11 to 22 cm, indicating the presence of Ah receptor antagonistic or inhibitive compounds. Sediments from the dumping site were determined to be highly contaminated and caused toxic effects in depths that are known to be influenced by dumping activities. In contrast, the reference sediment indicated only near to surface layers to be minor contaminated. In comparison with highly polluted sediments from other marine sites, the contamination of the dumping site could be ranked as elevated. Chem-TEQs exceeding bio-TEQs in a depth of 11 to 22 cm seem to be caused by AhR antagonistic compounds in the dumped material. Furthermore, particle-bound PAH concentrations assessed in this study were discussed against freely dissolved concentrations in interstitial water, as determined in a different study with the same sediment core. Sediments in the inner Mecklenburg Bight could be shown to be highly contaminated, at least with PAHs, causing articulate increased Ah receptor-mediated activities. Marine organisms may be exposed to these contaminants, in particular when inhabiting the sediment. Further research activities should extend the range of chemically analyzed pollutants and applied biotests and endpoints. Monitoring should close the gap between analytical methods in the laboratory and the field to determine possible impacts on organisms at site.