Cyanobacterial blooms are potential health hazards in water supply reservoirs. This paper reports analyses of a cyanobacterial bloom by use of PCR-based methods for direct detection and identification of strains present and determination of their toxigenicity. Serial samples from Malpas Dam, in the New England region of Australia, were analyzed during a prolonged, mixed cyanobacterial bloom in the summer of 2000 to 2001. Malpas Dam has been shown in the past to have toxic blooms of Microcystis aeruginosa that have caused liver damage in the human population drinking from this water supply reservoir. Cyanobacterial genera were detected at low cell numbers by PCR amplification of the phycocyanin intergenic spacer region between the genes for the β and α subunits. The potential for microcystin production was determined by PCR amplification of a gene in the microcystin biosynthesis pathway. The potential for saxitoxin production was determined by PCR amplification of a region of the 16S rRNA gene of Anabaena circinalis strains. Toxicity of samples was established by mouse bioassay and high-pressure liquid chromatography. We show that bloom components can be identified and monitored for toxigenicity by PCR more effectively than by other methods such as microscopy and mouse bioassay. We also show that toxigenic strains of Anabaena and Microcystis spp. occur at this site and that, over the course of the bloom, the cell types and toxicity changed. This work demonstrates that PCR detection of potential toxicity can enhance the management of a significant public health hazard.