Sustainable water resources management requires monitoring and assessment of water quality in addition to quantity. Coastal lagoons play a critical role for the people and the ecosystem at large. Water quality monitoring and assessment for lagoons in Sri Lanka is important considering its services to the country. However, due to a lack of resources, most of the lagoons are not monitored and reported properly for further action. This study aims to develop a protocol in terms of monitoring sites, parameters, and frequency for water quality monitoring using a case study in a coastal lagoon, in Sainthamaruthu, Sri Lanka. The physicochemical parameters were measured weekly at eighteen monitoring sites for 4 months during the dry season from June to September 2022. Cluster analysis (CA) along with Inverse Distance Weighted (IDW) interpolation technique revealed that a minimum of three sites out of 18 are sufficient for monitoring water quality in the lagoon. In light of Principal Component Analysis (PCA) and Discriminant Analysis (DA), it was decided to retain temperature, pH, turbidity, Total Dissolved solids (TDS), Electrical Conductivity (EC), and Dissolved Oxygen (DO) in monitoring programs, since they cumulatively account for 79% of the variation in water quality in the lagoon spatially and temporally. Monitoring turbidity, TDS, and EC at weekly interval, while monitoring temperature, pH, and DO at biweekly or monthly is recommended. A further indication of the lagoon's water quality is that the mean values for turbidity (27 NTU), EC (754 μS/cm), and DO (4.6 ppm) higher than ambient standards, while TDS (344 ppm) and pH (6.98) are within. Therefore, we conclude that the lagoon requires remediation measures to be suitable for environmental purposes during dry periods.