Magnetic susceptibility measurements are used to show that the superconducting transition temperature of yttrium barium cuprate is lowered by carbon trapped in the microstructure of dense polycrystalline materials during sintering. We show that carbon is retained in the material as a result of the porosity closing off during the sintering process. X-ray photoelectron spectroscopy and electron energy loss spectroscopy are used to show that the retained carbon forms a solid solution with YBa2Cu3O7−δ and resides in a barium carbonate-like configuration in the crystal structure. The origin of the lowering of the superconducting transition temperature and processing strategies for preventing carbon retention are discussed. © 1990, Materials Research Society. All rights reserved.