In the San Francisco Estuary, California, the largest estuary on the Pacific Coast of North America, the frequency and intensity of drought and associated cyanobacteria blooms are predicted to increase with climate change. To assess the impact of water quality conditions on estuarine fish health during successive severe drought years with Microcystis blooms, we performed fish embryo toxicity testing with Delta Smelt and Medaka. Fish embryos were exposed to filtered ambient water collected from the San Francisco Estuary during the Microcystis bloom season in 2014 and 2015, the third and fourth most severe recorded drought years in California. Medaka embryos incubated in filtered ambient waters exhibited high mortality rates (>77%), which was mainly due to bacterial growth. Medaka mortality data was negatively correlated with chloride, and positively correlated with water temperature, total and dissolved organic carbon, and ambient and net chlorophyll a concentration. Delta Smelt embryo mortality rates were lower (<42%) and no prominent seasonal or geographic trend was observed. There was no significant correlation between the Delta Smelt mortality data and water quality parameters. Aeromonas was the dominant bacteria that adversely affected Medaka. The growth of Aeromonas was suppressed when salinity was greater than or equal to 1psu and resulted in a significant reduction in mortality rate. Bacterial growth test demonstrated that the lysate of Microcystis cells enhanced the growth of Aeromonas. Toxin production by Microcystis is a major environmental concern, however, we conclude that dissolved substances released from Microcystis blooms could result in water quality deterioration by promoting growth of bacteria. Furthermore, a distinctive developmental deformity was observed in Medaka during the toxicity tests; somite formation was inhibited at the same time that cardiogenesis occurred and the functional heart was observed to be beating. The exact cause of the embryonic developmental deformity is still unknown.