Eutrophication is recognized as the main water quality problem worldwide, mainly due to the prevalence of harmful cyanobacterial blooms. Submerged macrophytes can control cyanobacterial biomass by removing nutrients from the water column or producing allelopathic compounds. As a result, they are highlighted as a potential strategy for restoring eutrophic waters. However, studies in semi-arid tropical ecosystems have shown inconsistent results regarding the effects of submerged macrophytes on cyanobacterial communities and cyanotoxin production. The aim of this study was to assess the effect of submerged macrophytes on cyanobacterial community structure and microcystin production in a tropical semi-arid reservoir subject to intense periods of water level drawdown. Submerged macrophyte cover, surface water physical and chemical variables, cyanobacterial community biovolume and microcystin concentration were measured monthly between October 2014 and July 2015 at the entrance of the river (Zone I) and dam zones (Zone II) of a reservoir. Although both zones were dominated by the submerged macrophyte Egeria densa, there were significant differences in macrophyte cover: Zone I had greater submerged macrophyte cover and Zone II had lower submerged macrophyte cover. Higher total cyanobacterial biovolume, potential microcystin producer biovolume and microcystin concentrations were observed in the zone with the greater submerged macrophyte cover. Moreover, our results showed that nutrient concentrations (total phosphorous, total nitrogen and ammonium) and physical variables (water temperature and turbidity) were also associated with the zone with greater submerged macrophyte cover. This study highlights that the water level drawdown of the reservoir appears to have favored an increase in nutrient concentration, especially in the zones with dense vegetation, which may have contributed to the coexistence of the high cyanobacteria biomass, high submerged macrophyte coverage and high microcystin concentration. Thus, developing strategies for the management of submerged macrophyte cover during water level drawdown events is essential for improving water quality and reducing the risk of harmful cyanobacterial blooms at the ecosystem level in tropical semi-arid aquatic ecosystems.