Invasive species and bottom-water hypoxia both constitute major global threats to the diversity and integrity of marine ecosystems. These stressors may interact with unexpected consequences, as invasive species that require an initial environmental disturbance to become established can subsequently become important drivers of ecological change. There is recent evidence that improved bottom-water oxygen conditions in coastal areas of the northern Baltic Sea coincide with increased abundances of the invasive polychaetes Marenzelleria spp. Using a reactive-transport model, we demonstrate that the long-term bioirrigation activities of dense Marenzelleria populations have a major impact on sedimentary phosphorus dynamics. This may facilitate the switch from a seasonally hypoxic system back to a normoxic system by reducing the potential for sediment-induced eutrophication in the upper water column. In contrast to short-term laboratory experiments, our simulations, which cover a 10-year period, show that Marenzelleria has the potential to enhance long-term phosphorus retention in muddy sediments. Over time bioirrigation leads to a substantial increase in the iron-bound phosphorus content of sediments while reducing the concentration of labile organic carbon. As surface sediments are maintained oxic, iron oxyhydroxides are able to persist and age into more refractory forms. The model illustrates mechanisms through which Marenzelleria can act as a driver of ecological change, although hypoxic disturbance or natural population declines in native species may be needed for them to initially become established. Invasive species are generally considered to have a negative impact; however, we show here that one of the main recent invaders in the Baltic Sea may provide important ecosystem services. This may be of particular importance in low-diversity systems, where disturbances may dramatically alter ecosystem services due to low functional redundancy. Thus, an environmental problem in one region may be either exacerbated or alleviated by a single species from another region, with potentially ecosystem-wide consequences.