We investigated magnetic susceptibility (MS) variations in hydrocarbon contaminated sediments. Our objective was to determine if MS can be used as an intrinsic bioremediation indicator due to the activity of iron-reducing bacteria. A contaminated and an uncontaminated core were retrieved from a site contaminated with crude oil near Bemidji, Minnesota and subsampled for MS measurements. The contaminated core revealed enriched MS zones within the hydrocarbon smear zone, which is related to iron-reduction coupled to oxidation of hydrocarbon compounds and the vadose zone, which is coincident with a zone of methane depletion suggesting aerobic or anaerobic oxidation of methane is coupled to iron-reduction. The latter has significant implications for methane cycling. We conclude that MS can serve as a proxy for intrinsic bioremediation due to the activity of iron-reducing bacteria iron-reducing bacteria and for the application of geophysics to iron cycling studies.