Abstract Total maximum daily loads (TMDL) are required by the US Environmental Protection Agency for pollutants that have impaired the designated uses of surface waters in the nation. Setting an appropriate TMDL requires quantitative information on both the external pollutant inputs and the processes affecting pollutant dynamics within the ecosystem. Here we focus on phosphorus (P), a globally important pollutant of freshwater lakes. We consider how biological processes (including those related to algae, plants, invertebrates and fish) can influence the ability of lakes to assimilate P, and in turn the ability of managers to select appropriate TMDLs. The primary focus is on shallow eutrophic lakes, with Lake Okeechobee (Florida, USA) serving as a case study. The paper deals only with in-lake processes as they relate to setting the TMDL and not the subsequent issue of load allocation among pollution sources. The results indicate that the ability of a shallow lake to assimilate P is substantially reduced when surplus levels of P occur in the water column, the phytoplankton becomes dominated by cyanobacteria, the benthic invertebrate community becomes dominated by oligochaetes, and submerged plant biomass is low. If some of these biological changes can be reversed in a rehabilitation program then the lake may be able to support a higher TMDL.