Photosynthesis by marine phytoplankton in the Southern Ocean, and the associated uptake of carbon, is thought to be currently limited by the availability of iron. One implication of this limitation is that a larger iron supply to the region in glacial times could have stimulated algal photosynthesis, leading to lower concentrations of atmospheric CO2. Similarly, it has been proposed that artificial iron fertilization of the oceans might increase future carbon sequestration. Here we report data from a whole-ecosystem test of the iron-limitation hypothesis in the Southern Ocean, which show that surface uptake of atmospheric CO2 and uptake ratios of silica to carbon by phytoplankton were strongly influenced by nanomolar increases of iron concentration. We use these results to inform a model of global carbon and ocean nutrients, forced with atmospheric iron fluxes to the region derived from the Vostok ice-core dust record. During glacial periods, predicted magnitudes and timings of atmospheric CO2 changes match ice-core records well. At glacial terminations, the model suggests that forcing of Southern Ocean biota by iron caused the initial approximately 40 p.p.m. of glacial-interglacial CO2 change, but other mechanisms must have accounted for the remaining 40 p.p.m. increase. The experiment also confirms that modest sequestration of atmospheric CO2 by artificial additions of iron to the Southern Ocean is in principle possible, although the period and geographical extent over which sequestration would be effective remain poorly known.