1. We examined the effects of an emergent macrophyte (Eleocharis sphacelata R. Br., Cyperaceae) and a submerged macrophyte (Vallisneria gigantea Graeb., Hydrocharitaceae) on the biogeochemistry of the sediments of a billabong in south-eastern Australia.2. Sediments from an E. sphacelata bed had significantly lower concentrations of exchangeable phosphorus than did sediments from a nearby bare area or a V. gigantea bed, but neither macrophyte had a measureable effect on their sediment's exchangeable ammonium content.3. The redox potential in the upper 10cm of E. sphacelata sediments was about 100 mV higher than that of bare sediments, or of sediments colonized by V. gigantea.4. There were few consistent differences between vegetated and bare sediments in terms of the activity of extracellular enzymes, such as α-amylase, protease, β-d glucosidase, lipase or alkaline phosphatase. Rates of alkaline phosphatase activity (235–306μmol (g dry wt)−1 day−1) were markedly higher than those commonly reported for sediments or soils.5. Rates of gas release were higher from bare sediments (21–93 ml m−2 h−1) than from E. sphacelata or V. gigantea sediments (17–23 and 21-24ml m−2 h−1, respectively). Gas bubbles consisted mainly of methane (26–66%) and nitrogen (15–68%). Rates of methane ebullition varied from 5 to 60ml m−2 h−1.6. In-vitro methanogenesis was most rapid in samples of the upper flocculent sediment. Methanogenesis was slower in V. gigantea sediments than in bare area or E. sphacelata sediments, but was markedly accelerated by additions of acetate and/or H2/CO2 in all sites.7. Profiles of total extractable fatty acids and phospholipid fatty acids demonstrated that material derived from higher plants dominated the sediment organic matter in all sites. Bacteria were also a significant component of sediment organic matter, as fatty acids for which bacteria can be assumed the sole source accounted for 18–30% of total fatty acid content. Biomarkers for sulphate-reducing bacteria (Desulfobacter spp.) were detected, and for type II methanotrophic bacteria.