Phytoplankton biomass and productivity at two sites in the newly impounded Lake Dunstan and, upriver, in Lake Wakatipu (Frankton Arm) showed ranges throughout 1 year of 0.2–2.0 mg chlorophyllam−3and 0.9–6.0 mg C m−3h−1(maximum rate of carbon fixation). Peaks in phytoplankton abundance occurred in spring and summer in both lakes, but relationships of biomass and productivity vs light and nutrients differed between the lakes. In Lake Dunstan, P‐vs‐I parameters indicated that phytoplankton were photo‐acclimated to prevailing light conditions. In the Frankton Arm, P‐vs‐I parameters indicated that phytoplankton were poorly adapted to light conditions. Phytoplankton biomass and productivity were only depressed at the shortest observed hydraulic residence times (< 3 days). Phytoplankton biomass and productivity in Lake Dunstan were predicted from dissolved and particulate nitrogen concentrations and mean mixed‐layer light intensity. Annual mean chlorophyllalevel was predicted satisfactorily using a published empirical model based on total phosphorus and inorganic suspended solids; a published deterministic model developed for reservoirs was tested and did not predict chlorophyllaconcentrations accurately. The results are discussed in the context of the paradigm of trophic upsurge which is commonly observed in newly impounded reservoirs.