Sedimentary pyrite formation links the global biogeochemical cycles of carbon, sulfur, and iron, which, in turn, modulate the redox state of the planet's surficial environment over geological time scales. Accordingly, the sulfur isotopic composition (δ34S) of pyrite has been widely employed as a geochemical tool to probe the evolution of ocean chemistry. Characteristics of the depositional environment and post-depositional processes, however, can modify the δ34S signal that is captured in sedimentary pyrite and ultimately preserved in the geological record. Exploring sulfur and iron diagenesis within the Bornholm Basin, Baltic Sea, we find that higher sedimentation rates limit the near-surface sulfidization of reactive iron, facilitating its burial and hence the subsurface availability of reactive iron for continued and progressively more 34S-enriched sediment-hosted pyrite formation (δ34S ≈ −5‰). Using a diagenetic model, we show that the amount of pyrite formed at the sediment-water interface has increased over the past few centuries in response to expansion of water-column hypoxia, which also impacts the sulfur isotopic signature of pyrite at depth. This contribution highlights the critical role of reactive iron in pyrite formation and questions to what degree pyrite δ34S values truly reflect past global ocean chemistry and biogeochemical processes. This work strengthens our ability to extract local paleoenvironmental information from pyrite δ34S signatures.