The coastal bays of South Florida are located downstream of the Florida Everglades, where a comprehensive restoration plan will strongly impact the hydrology of the region. Submerged aquatic vegetation communities are common components of benthic habitats of Biscayne Bay, and will be directly affected by changes in water quality. This study explores community structure, spatio-temporal dynamics, and tissue nutrient content of macroalgae to detect and describe relationships with water quality. The macroalgal community responded to strong variability in salinity; three distinctive macroalgal assemblages were correlated with salinity as follows: (1) low-salinity, dominated by Chara hornemannii and a mix of filamentous algae; (2) brackish, dominated by Penicillus capitatus, Batophora oerstedii, and Acetabularia schenckii; and (3) marine, dominated by Halimeda incrassata and Anadyomene stellata. Tissue-nutrient content was variable in space and time but tissues at all sites had high nitrogen and N:P values, demonstrating high nitrogen availability and phosphorus limitation in this region. This study clearly shows that distinct macroalgal assemblages are related to specific water quality conditions, and that macroalgal assemblages can be used as community-level indicators within an adaptive management framework to evaluate performance and restoration impacts in Biscayne Bay and other regions where both freshwater and nutrient inputs are modified by water management decisions.