In order to characterize the impact of turbidity plumes on optical and biological dynamics, a suite of environmental parameters were measured in southern Lake Michigan during the springtime recurrent sediment plume. In-water measurements of inherent optical properties (IOPs) were entered into the Hydrolight 4.2 radiative transfer model and the output was compared with measured apparent optical properties (AOPs) across a wide range of optical conditions. Hydrolight output and measured underwater light fields were then used to clarify the effects of the sediment plume on primary production, phytoplankton community composition, and nearshore remote sensing ocean color algorithms. Our results show that the sediment plume had a negligible effect on the spectral light environment and phytoplankton physiology. The plume did not significantly alter the spectral quality of available light and did not lead to light limited phytoplankton populations compared to non-plume conditions. Further, the suspended sediment in the plume did not seriously impact the performance of ocean color algorithms. We evaluated several currently employed chlorophyll algorithms and demonstrated that the main factor compromising the efficacy of these algorithms was the composition of phytoplankton populations. As phycobilin-containing algae became the dominant species, chlorophyll algorithms that use traditional blue/green reflectance ratios were compromised due to the high absorption of green light by phycobilin pigments. This is a notable difficulty in coastal areas, which have highly variable phytoplankton composition and are often dominated by sharp fronts of phycobilin and non-phycobilin containing algae.