To determine the benthic transformation pathways and fate of carbon associated with secondary-treated pulp and paper mill (PPM) effluent, (13)C-labeled activated sludge biomass (ASB) and phytoplankton (PHY) were added, separately, to estuarine intertidal sediments. Over 28 days, (13)C was traced into sediment organic carbon, fauna, seagrass, bacteria, and microphytobenthos and into fluxes of dissolved organic carbon (DOC) and dissolved inorganic carbon (DIC) from inundated sediments, and carbon dioxide (CO2(g)) from exposed sediments. There was greater removal of PHY carbon from sediments (~85% over 28 days) compared to ASB (~75%). Although there was similar (13)C loss from PHY and ASB plots via DIC (58% and 56%, respectively) and CO2(g) fluxes (<1%), DOC fluxes were more important for PHY (41%) than ASB (12%). Faster downward transport and loss suggest that fauna prefer PHY, due to its lability and/or toxins associated with ASB; this may account for different carbon pathways. Secondary-treated PPM effluent has lower oxygen demand than primary-treated effluent, but ASB accumulation may contribute to sediment anoxia, and respiration of ASB and PHY-derived DOC may make the water column more heterotrophic. This highlights the need to optimize secondary-treatment processes to control the quality and quantity of organic carbon associated with PPM effluent.