We have studied plant remains in thick beds of lacustrine sediments in the upper part of the Markarfljót drainage area in southern Iceland. We collected small samples of plant species from the same horizon and 14C dated them at the Aarhus AMS Dating Laboratory. Terrestrial plants yielded an age of 9 ka BP, whereas aquaic moss (Fontinalis antipyretica Hedw.) yielded the surprisingly old 14C age of 16 ka bp. We believe the age of the terrestrial plants reflects the true age of the sediment. The anomalously old 14C age of the aquatic moss may be an effect of geothermal water on the moss, as the area is known to be geothermally active today. Modern aquatic moss growing in geothermal water showed a similar 14C anomaly, with measured ages ranging from 6 to 8 ka BP, which may be explained by the equally old ages measured for the corresponding water samples. The 14C content of geothermal springs and neighboring rivers in the area ranges from 9 to 50 pMC, equivalent to an apparent age of 20–5.5 ka bp.