<p>Shallow lakes often exhibit two distinct ecological states: clear water dominated by macrophytes or turbid water dominated by phytoplankton, with both states strongly influenced by phosphorus availability. However, the specific mechanisms by which phosphorus utilization sustains phytoplankton communities in these contrasting states are not yet fully understood. For 1 year, we conducted monthly surveys of a macrophytic lake and an algal lake in Wuhan, China to examine how phosphorus availability and utilization strategies shaped phytoplankton community dynamics. The algal lake had notably higher phosphorus concentrations, especially in the sediments, with elevated levels of iron-bound phosphorus and a higher equilibrium phosphorus concentration, which indicated a larger potentially bioavailable phosphorus pool. In contrast, the macrophytic lake contained more organic phosphorus, including acid-soluble and sodium hydroxide-extractable phosphates. In the algal lake, there were significant correlations between sediment phosphorus adsorption parameters and dominant phytoplankton such as <i>Chroococcus</i> and <i>Merismopedia</i>. In the macrophytic lake, chlorophyll-a concentrations were positively correlated with alkaline phosphatase activity, which suggested a greater dependence on organic phosphorus hydrolysis. Structural equation modeling revealed that phytoplankton in the macrophytic lake relied primarily on organic phosphorus hydrolysis, whereas phytoplankton in the algal lake benefited from anaerobic release of inorganic phosphorus from the sediments. These contrasting phosphorus utilization strategies shaped species dominance, which not only influenced phytoplankton community composition but also serve as valuable ecological indicators of nutrient dynamics and lake health. Overall, our findings provide a foundation for eutrophication management and ecosystem restoration.</p>