Development of seasonal anoxia and algal blooms was studied in Torquay Canal and Bald Eagle Creek, 2 dead end canals in the northern Rehoboth Bay, one of the 3 Delaware Inland Bays. Mean low water depth is ca. 2 m, but dredging has produced over a dozen holes with a water depth of 5.5 m. From May to September 2002, in situ temperature, salinity, pH, dissolved O 2 and H 2 S were measured in the water column. Nutrients (NO 3 -, NO 2 -, NH 4 + and PO 4 3 -) were analyzed and the dominant members of the phytoplankton community were identified and numerated from samples collected in conjunction with in situ depth profiles. In early May, a significant potential harmful Prorocentrum minimum bloom (275 µg l -1 chl a) was present in Torquay Canal. Dissolved O 2 was supersaturated in the surface water, but H 2 S developed below 2 m as the water column stratified. Diatom blooms were observed in late May and mid-July, the only times that O 2 penetrated deeper, but their biomass was not significant. In early September, a storm over 3 d partially mixed the water column, and a large Heterosigma akashiwo bloom (231 µg l -1 chl a) was observed. Our data indicate that nutrients accumulated in the water column from runoff, organic matter decomposition, and from Fe(III) (oxy)hydroxide reduction in sediments. High concentrations of H 2 S, NH 4 + and PO 4 3 -were present in the bottom waters during summer. PO 4 3 -and NH 4 + from the bottom water entered shallower waters as the oxic-anoxic interface moved up to the surface. The supply of nutrients from bottom to surface waters supported harmful algal blooms during seasonal anoxic conditions as dinoflagellates and flagellates dominated over diatoms in surface waters. Seasonal anoxia development is not only a potential threat to fish and shellfish but also causes shifts of algal species to potentially harmful taxa.