There is increasing interdisciplinary interest in phytoplankton community dynamics as the growing environmental problems of water quality (particularly eutrophication) and climate change demand attention. This has led to a pressing need for improved biophysical and causal understanding of Phytoplankton Functional Type (PFT) optical signals, in order for satellite radiometry to be used to detect ecologically relevant phytoplankton assemblage changes. Biophysically and biogeochemically consistent phytoplankton Inherent Optical Property (IOP) models play an important role in achieving this understanding, as the optical effects of phytoplankton assemblage changes can be examined systematically in relation to the bulk optical water-leaving signal. The Equivalent Algal Populations (EAP) model is used here to investigate the source and magnitude of size- and pigment- driven PFT signals in the water-leaving reflectance, as well as the potential to detect these using satellite radiometry. This model places emphasis on the determination of biophysically consistent phytoplankton IOPs, with both absorption and scattering determined by mathematically cogent relationships to the particle complex refractive indices. All IOPs are integrated over an entire size distribution. A distinctive attribute is the model’s comprehensive handling of the spectral and angular character of phytoplankton scattering. Selected case studies and sensitivity analyses reveal that phytoplankton spectral scattering is most useful and the least ambiguous driver of the PFT signal. Key findings are that there is the most sensitivity in phytoplankton backscatter ( b b ϕ ) in the 1–6 μ m size range; the backscattering-driven signal in the 520 to 570 nm region is the critical PFT identifier at marginal biomass, and that, while PFT information does appear at blue wavelengths, absorption-driven signals are compromised by ambiguity due to biomass and non-algal absorption. Low signal in the red, due primarily to absorption by water, inhibits PFT detection here. The study highlights the need to quantitatively understand the constraints imposed by phytoplankton biomass and the IOP budget on the assemblage-related signal. A proportional phytoplankton contribution of approximately 40% to the total b b appears to a reasonable minimum threshold in terms of yielding a detectable optical change in R r s . We hope these findings will provide considerable insight into the next generation of PFT algorithms.