Boreal lakes are major components of the global carbon cycle, partly because of sediment-bound heterotrophic microorganisms that decompose within-lake and terrestrially derived organic matter (t-OM). The ability for sediment bacteria to break down and alter t-OM may depend on environmental characteristics and community composition. However, the connection between these two potential drivers of decomposition is poorly understood. We tested how bacterial activity changed along experimental gradients in the quality and quantity of t-OM inputs into littoral sediments of two small boreal lakes, a dark and a clear lake, and measured the abundance of operational taxonomic units and functional genes to identify mechanisms underlying bacterial responses. We found that bacterial production (BP) decreased across lakes with aromatic dissolved organic matter (DOM) in sediment pore water, but the process underlying this pattern differed between lakes. Bacteria in the dark lake invested in the energetically costly production of extracellular enzymes as aromatic DOM increased in availability in the sediments. By contrast, bacteria in the clear lake may have lacked the nutrients and/or genetic potential to degrade aromatic DOM, and instead mineralized photo-degraded OM into CO2. The two lakes differed in community composition and the higher concentration of dissolved organic carbon in the clear lake was associated with the community assemblages in the clear lake. Furthermore, functional genes relating to t-OM degradation were relatively higher in the dark lake. Our results suggest that future changes in t-OM inputs to lake sediments will have different effects on carbon cycling depending on the potential for photo-degradation of OM and composition of resident bacterial communities.