Iron (Fe) may alter the biodegradation of dissolved organic matter (DOM), by interacting with DOM, phosphorus (P), and microbes. We isolated DOM and a bacterial community from boreal lake water and examined bacterial growth on DOM in laboratory experiments. Fe was introduced either together with DOM (DOM-Fe) or into bacterial suspension, which led to the formation of insoluble Fe precipitates on bacterial surfaces (Fe coating). In the latter case, the density of planktonic bacteria was an order of magnitude lower than that in the corresponding treatment without introduced Fe. The association of Fe with DOM decreased bacterial growth, respiration, and growth efficiency compared with DOM alone at the ambient concentration of dissolved P (0.16 µmol L−1), indicating that DOM-associated Fe limited the bioavailability of P. Under a high concentration (21 µmol L−1) of P, bacterial biomass and respiration were similar or several times higher in the treatment where DOM was associated with Fe than in a corresponding treatment without Fe. Based on the next generation sequencing of 16S rRNA genes, Caulobacter dominated bacterial communities grown on DOM-Fe. This study demonstrated that association of Fe with a bacterial surface or P reduces bacterial growth and the consumption of DOM. In contrast, DOM-Fe is bioavailable and bound Fe can even stimulate bacterial growth on DOM when P is not limiting.