We implement a Bayesian Markov chain Monte Carlo algorithm for estimating species divergence times that uses heterogeneous data from multiple gene loci and accommodates multiple fossil calibration nodes. A birth-death process with species sampling is used to specify a prior for divergence times, which allows easy assessment of the effects of that prior on posterior time estimates. We propose a new approach for specifying calibration points on the phylogeny, which allows the use of arbitrary and flexible statistical distributions to describe uncertainties in fossil dates. In particular, we use soft bounds, so that the probability that the true divergence time is outside the bounds is small but nonzero. A strict molecular clock is assumed in the current implementation, although this assumption may be relaxed. We apply our new algorithm to two data sets concerning divergences of several primate species, to examine the effects of the substitution model and of the prior for divergence times on Bayesian time estimation. We also conduct computer simulation to examine the differences between soft and hard bounds. We demonstrate that divergence time estimation is intrinsically hampered by uncertainties in fossil calibrations, and the error in Bayesian time estimates will not go to zero with increased amounts of sequence data. Our analyses of both real and simulated data demonstrate potentially large differences between divergence time estimates obtained using soft versus hard bounds and a general superiority of soft bounds. Our main findings are as follows. (1) When the fossils are consistent with each other and with the molecular data, and the posterior time estimates are well within the prior bounds, soft and hard bounds produce similar results. (2) When the fossils are in conflict with each other or with the molecules, soft and hard bounds behave very differently; soft bounds allow sequence data to correct poor calibrations, while poor hard bounds are impossible to overcome by any amount of data. (3) Soft bounds eliminate the need for "safe" but unrealistically high upper bounds, which may bias posterior time estimates. (4) Soft bounds allow more reliable assessment of estimation errors, while hard bounds generate misleadingly high precisions when fossils and molecules are in conflict.