We studied phytoplankton community and succession in Lake Dishui, the largest man-made coastal lake in China. The lake experienced drastic changes in physicochemical conditions since its creation in 2003. Monthly phytoplankton communities were characterized between 2006 and 2011. A two-dimensional solution of nonmetric multidimensional scaling clearly delineated four groups of distinct phytoplankton community structure. Indicator species analysis showed that Group I (2006–2008) was characterized by mainly nanoplankton including Chromulina pygmaea. Group II (2009) was characterized by nonmotile, unicellular, elongated, or filamentous taxa, which are resistant to grazing pressure due to their large size. Group III (winter–early spring since 2010) was characterized by many motile taxa. The most characteristic taxa in Group IV (summer–autumn since 2010) were the flagellate algae. Seasonal variation in phytoplankton community was highest after 2010. Changes in phytoplankton communities may closely reflect rapid changes in lake environmental conditions such as desalination and nutrient enrichment.