In this study, qualitative and quantitative characteristics of phytoplankton community structure and environmental factors which have influences on its distribution and the changes in Izmir Bay (Aegean Sea) were investigated. The water samples were collected seasonally between January 1998 and December 2001 from 3 sampling sites (from surface, -5 m, -10 in and -15 m). During the study period, a total of 115 taxa from three algal classes, Cyanophyceae, Dinophyceae and Bacillariophyceae were determined. Spatio-temporal phytoplankton community composition in the bay was often dominated by dinoflagellates but shift to diatom dominance was observed in some periods, particularly in spring and winter. The Wastewater Treatment Plant (WTP) began to treat domestic and industrial wastes since early 2000. The sampling periods of the study include both before and after the activation of treatment plant. Although WTP is sufficient for removal of nitrogen from the wastes, it is inadequate for removal of phosphate. This is also compatible with the decreasing N/P ratios observed during 2000-2001 in the middle and inner bays. Therefore, the decrease in the ratios caused by treatment plant, affects the species diversity of both dinoflagellat and diatom assemblages. The student's t-tests and the discriminant analyses outcome from different stations and years demonstrate statistically significant variances at a P <= 0.05 probability level. These results indicated that the considerable improvements should be expected in the next years.