Analysis of a global compilation of dissolved-iron observations provides insights into the processes controlling iron distributions and some constraints for ocean biogeochemical models. The distribution of dissolved iron appears consistent with the conceptual model developed for Th isotopes, whereby particle scavenging is a two-step process of scavenging mainly by colloidal and small particulates, followed by aggregation and removal on larger sinking particles. Much of the dissolved iron (<0.4 μm) is present as small colloids (>~0.02 μm) and, thus, is subject to aggregation and scavenging removal. This implies distinct scavenging regimes for dissolved iron consistent with the observations: 1) a high scavenging regime – where dissolved-iron concentrations exceed the concentrations of strongly binding organic ligands; and 2) a moderate scavenging regime – where dissolved iron is bound to both colloidal and soluble ligands. Within the moderate scavenging regime, biological uptake and particle scavenging decrease surface iron concentrations to low levels (<0.2 nM) over a wide range of low to moderate iron input levels. Removal rates are also highly nonlinear in areas with higher iron inputs. Thus, observed surface-iron concentrations exhibit a bi-modal distribution and are a poor proxy for iron input rates. Our results suggest that there is substantial removal of dissolved iron from subsurface waters (where iron concentrations are often well below 0.6 nM), most likely due to aggregation and removal on sinking particles of Fe bound to organic colloids. We use the observational database to improve simulation of the iron cycle within a global-scale, Biogeochemical Elemental Cycling (BEC) ocean model. Modifications to the model include: 1) an improved particle scavenging parameterization, based on the sinking mass flux of particulate organic material, biogenic silica, calcium carbonate, and mineral dust particles; 2) desorption of dissolved iron from sinking particles; and 3) an improved sedimentary source for dissolved iron. Most scavenged iron (90%) is put on sinking particles to remineralize deeper in the water column. The model-observation differences are reduced with these modifications. The improved BEC model is used to examine the relative contributions of mineral dust and marine sediments in driving dissolved-iron distributions and marine biogeochemistry. Mineral dust and sedimentary sources of iron contribute roughly equally, on average, to dissolved iron concentrations. The sedimentary source from the continental margins has a strong impact on open-ocean iron concentrations, particularly in the North Pacific. Plumes of elevated dissolved-iron concentrations develop at depth in the Southern Ocean, extending from source regions in the SW Atlantic and around New Zealand. The lower particle flux and weaker scavenging in the Southern Ocean allows the continental iron source to be advected far from sources. Both the margin sediment and mineral dust Fe sources substantially influence global-scale primary production, export production, and nitrogen fixation, with a stronger role for the dust source. Ocean biogeochemical models that do not include the sedimentary source for dissolved iron, will overestimate the impact of dust deposition variations on the marine carbon cycle. Available iron observations place some strong constraints on ocean biogeochemical models. Model results should be evaluated against both surface and subsurface Fe observations in the waters that supply dissolved iron to the euphotic zone.