Human activities in coastal areas frequently cause loss of benthic macrophytes (e.g. seagrasses) and concomitant increases in microalgal production through eutrophication. Whether such changes translate into shifts in the composition of sediment detritus is largely unknown, yet such changes could impact the role these ecosystems play in sequestrating CO2. We reconstructed the sedimentary records of cores taken from two sites within Botany Bay, Sydney – the site of European settlement of Australia – to look for human-induced changes in dominant sources of detritus in this estuary. Cores covered a period from the present day back to the middle Holocene (~6000 years) according to 210Pb profiles and radiocarbon (14C) dating. Depositional histories at both sites could not be characterized by a linear sedimentation rate; sedimentation rates in the last 30–50 years were considerably higher than during the rest of the Holocene. C : N ratios declined and began to exhibit a microalgal source signature from around the time of European settlement, which could be explained by increased nutrient flows into the Bay caused by anthropogenic activity. Analysis of stable isotopic ratios of 12C/13C showed that the relative contribution of seagrass and C3 terrestrial plants (mangroves, saltmarsh) to detritus declined around the time of rapid industrial expansion (~1950s), coinciding with an increase in the contribution of microalgal sources. We conclude that the relative contribution of microalgae to detritus has increased within Botany Bay, and that this shift is the sign of increased industrialization and concomitant eutrophication. Given the lower carbon burial efficiencies of microalgae (~0.1%) relative to seagrasses and C3 terrestrial plants (up to 10%), such changes represent a substantial weakening of the carbon sink potential of Botany Bay – this occurrence is likely to be common to human-impacted estuaries, and has consequences for the role these systems play in helping to mitigate climate change.