Algal bloom (AB) is a complex process of algal formation, outbreak and extinction in lakes. Many previous studies have focused on impacts of AB outbreak on aquatic eco-environment, but limited attention has been paid to the effects of AB formation, outbreak, and extinction on physico-chemical properties of water and sediment in lakes. In this study, the AB and the free algal bloom (FAB) regions were determined in Lake Chaohu on the basis of previous reports and monitoring data. Water and sediment samples were taken by sequential mode from May to September in 2012 to investigate effects of AB formation, outbreak and extinction on physico-chemical properties of water and sediment as well as nitrogen and phosphorous concentrations in sediment. Results showed that AB formation process occurred from May 15 to June 20 in Lake Chaohu, outbreak process lasted from June 20 to September 5, and then extinction process started. In most cases, water transparency (SD), water pH and water dissolved oxygen (DO) showed significant differences between the AB and FAB regions and presented different change trends with sampling time respectively. However, water temperature, oxidation-reduction potential (ORP) and electrical conductivity (EC) did not show difference between the two regions. The concentrations of various forms nitrogen and phosphorus in water of the FAB region were significantly lower than those in water of the AB region, and fluctuated slightly with sampling time. In the AB region, however, the concentrations of TDN, NO₃^--N, NH₄⁺-N, TN, TDP and PO₄^3--P in water showed downward trend during the AB formation process and the early stage of AB outbreak process, followed by upward trends during the later stage of AB outbreak and the AB extinction process. The concentrations of total nitrogen, total phosphorus and total organic matter in sediments of the AB region were significantly higher than those in sediment of the FAB region, and they showed different change trends with sampling time in the two regions respectively. This study indicated that AB formation, outbreak and extinction produced different impacts on the physico-chemical properties of water and sediment as well as the nitrogen and phosphorous concentrations in sediment. This result is important to control and treat eutrophication and algal bloom in lakes.