The study of the importance of physicochemical parameters of water for algal growth and development in Jagdishpur Reservoir was carried out in the present research. Occurrence of algal species and values of water quality parameters also indicate the ecological nature and the present status of the reservoir. Water samples were collected from Jagdishpur Reservoir in Kapilvastu District (Nepal), in two seasons (wet and dry). The following physicochemical parameters of water were analyzed: temperature, pH, dissolved oxygen, alkalinity, concentration of nitrates and phosphates, free CO2, hardness, conductivity, total dissolved solids. The values of free CO2, hardness, phosphate, temperature, and dissolved oxygen were high in wet season while alkalinity, nitrate, conductivity and total dissolved solid were high in dry season. Altogether 81 algal species belonging to 53 genera and 6 classes were recorded. Higher number of algal species was recorded in the dry season rather than in the wet season. The highest number of species was noted among Chlorophyceae, followed by Cyanobacteria > Bacillariophyceae > Euglenophyceae > Crysophyceae and Dinophyceae. Cosmarium had the highest number of species (13) among all genera. During the wet season, Cosmarium, Calothrix and Phormidium were the genera with the highest number of species while Bulbochaete, Trachelomonas and Gomphonema were genera with the lowest number of species. During the dry season, Cymbella, Cosmarium and Rhopalodia were genera with highest number of species while Euglena, Gloeotrichia and Trachelomonas were genera with lowest number of species. Algal diversity was positively correlated with the increase of alkalinity, conductivity and TDS, while negatively correlated with free CO2, hardness, concerntration of phosphates and nitrates, DO, pH and temperature. Shannon–Weiner diversity index value was higher during the dry season than in the wet season.