To mitigate cyanobacterial blooms, the naphthoquinone derivative, NQ 2-0, which has selective algicidal activity against cyanobacteria, has been developed. However, due to a lack of information on its algicidal mechanisms, there are significant gaps in our understanding of how this substance is capable of selectively killing cyanobacteria. Here, we investigated the selective algicidal mechanisms of NQ 2-0 using target (Microcystis aeruginosa) and non-target (Cyclotella sp. and Selenastrum capricornutum) species. NQ 2-0 showed selective algicidal activity against only M. aeruginosa, and this activity was strongly light-dependent. This NQ compound has selectively reduced the oxygen evolution rate and photosystem II (PSII) efficiency of M. aeruginosa throughout blocking electron transfer from the photosynthetic electron transport system, and significantly (p ≤ 0.05) increased levels of reactive oxygen species (ROS), resulting in membrane damage through lipid peroxidation. In ultrastructural observations, thylakoid membranes were disintegrated within 12 h after NQ 2-0 treatment, and cytoplasmic vacuolation and disintegrated cellular membrane were observed at 24 h. These findings suggest that increased ROS levels following NQ 2-0 treatment may induce cell death. Interestingly, compared to non-target eukaryotic cells, M. aeruginosa showed relatively late antioxidant response to reduce the increased ROS level, this may enhance algicidal activity against this cyanobacterium.