Sixty percent of the World’s large rivers are moderately or strongly affected by dam construction and consequent water storage. However, the effect of dams on algal blooms in impounded tributaries has not been thoroughly studied. This study focused on the impacts of sediment and microbial loop on algal bloom formation and deterioration in Gaoyang Lake, on the Pengxi River, China. Pengxi River is the largest, and one of the most algal bloomed, northern tributaries of the Three Gorges Reservoir (TGR). Water samples were taken from three layers (surface: 0.5 m deep, middle: thermocline, and bottom: 0.5 m above lake bed) at three sites (two at the edge and one in the centre of the lake) during the summers of 2014, 2018 and 2019. Chlorophyll a (Chl-a), total phosphorous (TP) and dissolved total phosphorous (DTP) were measured in lab within 48 h after sampling, while the DO and temperature profile were read by the logger automatically. The results showed: 1) The surface density layer in the water column during stratification restricted mixing and promoted the development of cyanophyte blooms; 2). During the algal season, the surface and middle layer Chl-a changed rapidly on daily basis, i.e. 82µg. L-1 to 413µg. L-1 within 24 hrs; 3). Within the surface and middle layers, Chl-a was significantly, positively correlated with TP (p<0.01), showing Gaoyang Lake is a bottom-up controlled system; 4). Wave and mixing of water column compensated P, as well as phytoplankton biomass from the sediment and lower part of the water column; 5). Zooplankton and fungus, other than bacteria, were the major grazers and decomposers on phytoplankton biomass (p<0.05). Therefore, these two groups’ DNA OTU by DNA high throughput was significantly negatively related. This case study would be helpful to understand the development of algal blooms in dammed rivers.