Harmful algal blooms (HABs), eutrophication, and internal pollutant sources from sediment, represent serious problems for public health, water quality, and ecological restoration worldwide. Previous studies have indicated that Modified Local Soil (MLS) technology is an efficient and cost-effective method to flocculate the HABs from water and settle them onto sediment. Additionally, MLS capping treatment can reduce the resuspension of algae flocs from the sediment, and convert the algal cells, along with any excessive nutrients in-situ into fertilisers for the restoration of submerged macrophytes in shallow water systems. Furthermore, the capping treatment using oxygen nanobubble-MLS materials can also mitigate sediment anoxia, causing a reduction in the release of internal pollutants, such as nutrients and greenhouse gases. This paper reviews and quantifies the main features of MLS by investigating the effect of MLS treatment in five pilot-scale whole-pond field experiments carried out in Lake Tai, South China, and in Cetian Reservoir in Datong city, North China. Data obtained from field monitoring showed that the algae-dominated waters transform into a macrophyte-dominated state within four months of MLS treatment in shallow water systems. The sediment-water nutrient fluxes were substantially reduced, whilst water quality (TN, TP, and transparency) and biodiversity were significantly improved in the treatment ponds, compared to the control ponds within a duration ranging from one day to three years. The sediment anoxia remediation effect by oxygen nanobubble-MLS treatment may further contribute to deep water hypoxia remediation and eutrophication control. Combined with the integrated management of external loads control, MLS technology can provide an environmentally friendly geo-engineering method to accelerate ecological restoration and control eutrophication.