Diagenetic sediment phosphorus (P) recycling is a widespread phenomenon, which causes degradation of water quality and promotes harmful algal blooms in lakes worldwide. Strong P coupling with iron (Fe) in some lakes is thought to inhibit diagenetic P efflux, despite elevated P concentrations in the sediment. In these sediments, the high Fe content leads to P scavenging on ferric Fe near the sediment surface, which increases the overall P retention. Reduced external Fe inputs in such lakes due to industrial pollution control may lead to unintended consequences for sediment P retention. Here, we study sediment geochemistry and sediment-water interactions in the historically polluted Hamilton Harbour (Lake Ontario, Canada) which has undergone 30 years of restoration efforts. We investigate processes controlling diagenetic P recycling, which has previously been considered minor due to historically high Fe loading. Our results demonstrate that present sediment P release is substantial, despite sediment Fe content reaching 6.5% (dry weight). We conclude that the recent improvement of wastewater treatment and industrial waste management practices has reduced Fe pollution, causing a decrease in diagenetically reactive Fe phases, resulting in the reduction of the ratio of redox-sensitive P and Fe, and the suppression of P scavenging on Fe oxyhydroxides.