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Rates of inorganic nutrient and oxygen fluxes, and gross community primary productivity were investigated using incubated cores in July, August and September 2001, in a seagrass meadow of Lake Illawarra, a barrier estuary in New South Wales, Australia. The results indicated that rates of gross primary productivity were high, varying from C = 0.62 to 1.89 g m-2 d-1; low P/R ratios of 0.28–0.48 define the system as heterotrophic and indicate that more carbon is respired than is produced. In order to determine the effect of macroalgae on O2 and nutrient fluxes, measurements were also conducted on cores from which the macroalgae had been removed. The results showed that the O2 fluxes during light incubations were significantly lower in the cores without macroalgae (P<0.01), indicating that macroalgae could be a significant contributor to the primary production in the lake. In general, nutrient fluxes showed a typical diurnal variation with an efflux from sediments in the dark and a reduced efflux (or uptake) in the light. Dissolved inorganic nitrogen (NO2-+ NO3-+NH4+) net fluxes were directed from the sediments towards the water column and dominated by the NH4+ fluxes (>80%). NO2-+ NO3- and o-P fluxes were always very low during the sampling period. The increasing tendency of net nutrient effluxes, especially NH4+ from July to September, is consistent with the increase of the water temperature and seagrass biomasses. However, in September, significantly lower light, dark and net NH4+ effluxes were found in the cores with macroalgae (SA-sediments) compared with the cores without macroalgae (S-sediments). These results support the hypothesis that actively-growing dense macroalgal mats (i.e., algal blooms in September) may act as a filter reducing the flux of nutrients to the water column. [ABSTRACT FROM AUTHOR]