A three-dimensional inverse groundwater flow and transport model that fits hydraulic-head and concentration data simultaneously using nonlinear regression is presented and applied to a layered sand and silt groundwater system beneath the Grindsted Landfill in Denmark. The aquifer is composed of rather homogeneous hydrogeologic layers. Two issues common to groundwater flow and transport modelling are investigated: 1) The accuracy of simulated concentrations in the case of calibration with head data alone; and 2) The advantages and disadvantages of using a two-dimensional cross-sectional model instead of a three-dimensional model to simulate contaminant transport when the source is at the land surface. Results show that using only hydraulic heads in the nonlinear regression produces a simulated plume that is profoundly different from what is obtained in a calibration using both hydraulic-head and concentration data. The present study provides a well-documented example of the differences that can occur. Representing the system as a two-dimensional cross-section obviously omits some of the system dynamics. It was, however, possible to obtain a simulated plume cross-section that matched the actual plume cross-section well. The two-dimensional model execution times were about a seventh of those for the three-dimensional model, but some difficulties were encountered in representing the spatially variable source concentrations and less precise simulated concentrations were calculated by the two-dimensional model compared to the three-dimensional model. Summed up, the present study indicates that three dimensional modelling using both hydraulic heads and concentrations in the calibration should be preferred in the considered type of transport studies.