The settlement time of Iceland has been debated for years as radiocarbon dates of bulk wood samples have been interpreted to set a timing 150–200 yr earlier than indicated by tephrochronology (later than AD 871±2) and the Sagas (AD 874). This early date is also in conflict with the dating results on extensive series of short-lived material such as grain and domestic animal and human bone remains of early settlers. The old-wood effect for the charcoal and bulk wood samples has been suggested to explain this controversy. This study uses a Bayesian model, implemented in the OxCal program, to show that the charcoal data combined with short-lived material (grain/bone) suggest ages anywhere in the interval AD 854–922 (95.4% probability), indicating that the available 14C data cannot be taken as compelling evidence that there was a settlement any earlier than AD 922. The Bayesian model shows that the observed exponential distribution of the excess age of the bulk wood samples is exactly as expected if there was an old-wood effect evident in the samples.