Phosphorus (P) is an essential biogenic element in ecosystems; but excessive or insufficient P in coastal waters caused by human activities has led to serious ecological issues. However, the understanding of the dynamic processes of different P forms in high turbidity estuaries/bays, as well as their impact on eutrophication and coastal algal blooms, is still relatively limited. To address this issue, we analyzed P dynamics and their impact on eutrophication in Hangzhou Bay (HZB), which is typical of eutrophic and turbid bay worldwide. The concentration of particulate P (PTP) was 3–5 times higher than that of dissolved inorganic phosphorus (DIP). Seasonal sediment resuspension led to the accumulation of suspended particulate matter (SPM) and PTP with regional variation, both maintaining DIP concentrations above 1 μmol/L within the bay. Furthermore, 3000 tons of bioavailable P were retained in the fine-grained SPM, with the potential for outward transport, fueling subsequent harmful algal blooms. A comparative analysis of global coastal waters highlighted that different turbidity levels significantly affect P cycling. Therefore, understanding the relationship between SPM and P in highly turbid waters is crucial for effective management of eutrophication.