This study evaluates the water quality from Tri An Reservoir, a drinking water supply for several million people in southern Vietnam, in terms of cyanobacterial biomass and their potent toxins, microcystins (MCs). Cyanobacteria, their toxins and environmental parameters were monitored monthly for 1 year (April 2008–March 2009) at six stations covering a transect through the reservoir. Dynamics of cyanobacterial abundance in relation to cyanobacterial biomass, toxins and environmental factors were investigated. Environmental variables from Tri An Reservoir favored algal and cyanobacterial development. However, cyanobacterial biomass and proportion varied widely, influenced by physical conditions, available nutrients and nutrient competition among the phytoplankton groups. Cyanobacterial biomass correlated slightly positively to temperature, pH and biochemical oxygen demand (BOD5), but negatively to total inorganic nitrogen concentrations. During most of the sampling times, MC concentrations in the reservoir were quite low (≤0.07 μg L−1 MC-LR equivalent), and presented a slight positive correlation to BOD5, total nitrogen:total phosphorus ratio and cyanobacterial biomass. However, in cyanobacterial scum samples, which now and then occurred in the reservoir, MC concentrations reached up to 640 μg g−1 DW−1. The occurrence of MC in the reservoir poses a risk to local residents who use the water daily for domestic purposes.