Runaway expansion of shallow ponds can catalyze the conversion of vegetated marshes into open water environments. Predicting how this transition affects ecosystem functioning is difficult because little is known about pond biogeochemistry. We characterized sediment organic matter sources and transformations in three ponds with different plant communities, over alternating periods of tidal isolation and flushing, during summer and fall, using a combination of stable isotopes, lipid biomarkers, and benthic fluxes. Sediment respiration rates (1.66 ± 0.09 mmol C m−2 d−1 to 28.53 ± 7.76 mmol C m−2 d−1) were comparable to shallow estuaries and driven by sulfate reduction. Rates varied across ponds, reflecting differences in summertime Ruppia maritima and macroalgae abundances, but were similar between seasons. Interactions between aboveground plant and sediment bacterial communities translated into distinct biogeochemical processes across the three ponds. Tidal isolation and summer weather intensified plant and bacterial community effects on pond carbon dynamics, resulting in algal biomass and lipid δ13C values that were 3–12‰ enriched, compared to nearby habitats. Surface sediment organic matter mainly derived from pond microalgae and was compositionally distinct from tidal creeks and marshes. Surprisingly, sediment bacteria were not tightly coupled to benthic microalgae but decomposed multiple carbon sources in surface sediments and became increasingly reliant on buried peat at deeper horizons. Pond development over time could largely be explained by sediment respiration and the simultaneous accretion of the surrounding marsh platform. The role of decomposition in pond expansion is consistent with previous assessments based on whole-pond metabolism rates. Consequently, future pond expansion could alter ecosystem biogeochemistry and reduce carbon storage.