Traditionally, it has been stated that heat is transferred from water to lake sediments during the summer and released from lake sediments into the water during the winter (ice cover) period. While this is true for seasonal averages, the direction of the heat flux reverses frequently on shorter, for example, daily timescales. Therefore the lake sediments not only provide seasonal heat storage but also add significant thermal inertia to the water column. Sediment heat fluxes are most important in shallow lakes. In this study the sediment heat exchange is calculated separately for every layer of a one-dimensional, deterministic, unsteady year-round lake water temperature model and then included as a source/sink term in the lake water temperature simulation. The importance of sediment heat transfer has thus been identified, and the dynamics of sediment heat exchange have been discovered. Heat can transfer into or out of the lake sediment during both the open water season and the winter ice cover period. The influence of the sediment heat exchange on water temperature simulations is quantified. ¿ American Geophysical Union 1996