Abstract: Located in one of the most rapidly developing areas in China, Taihu Lake watershed is undergoing an accelerated process of urbanisation. Concomitant to fast economic bloom and urban expansion is the deterioration of water quality. The eutrophication of Taihu Lake has become a major environmental concern of the region. The main objective of this paper is to summarize the effects of urbanization on eutrophication of the lake. In addition to the increased discharge of domestic wastewater there are also some indirect impact of urbanization on the nutrient status of surface water. Among them are decreased utilization of organic manure, increased dosage of chemical fertilizer, the shift of scattered livestock and poultry breeding to highly concentrated ones, higher runoff due to more impermeable ground, and the encroachment of wetland in which a significant amount of nutrients can be removed from water. All of these can lead to a larger contribution of non-point source N and P to water bodies. To mitigate these negative effects of urbanization on environment some practicable options have been proposed by the authors.