Lipid biomarkers are potential tools for identifying the sources, diagenesis and reactivity of organic matter (OM) in marine systems, including in Antarctica where the particular environmental characteristics have motivated several studies of organic markers. Sedimentary sterol distributions were determined in two sediment cores (PGI-1 and PGI-2) collected from the marine environment around Penguin Island, Antarctica, during the 2007–08 summer. The cores were sectioned at 1 cm intervals and the sterols were analysed using gas chromatography with flame ionization detection. The results indicate that the sterols were subjected to decades of degradation and transformation with depth in both cores. However, an expected progressive conversion of stenols to stanols (evaluated by 5α-stanols/Δ5-stenols ratio) within the deepest sediment layers was not clear, suggesting low degradation rates. In PGI-1, the deposition of large quantities of penguin guano affected the distribution of sterols and, consequently, primary production was favoured by the ornithogenic soil input. The results contribute to the understanding of the current processes associated with primary sources and transformation of OM in this important region of the Antarctic environment.