The water level in Three Gorges Reservoir exhibited drastic change (30 m) within a year, i.e. fall period of water level decrease (April to May), flood period of low water level (June to August), storage period of water level increase (September to October) and high-water period (from November to next March). To study the response of phytoplankton functional groups to changes in water level in Xiangxi Bay (XXB), Three Gorges Reservoir, the characteristics of phytoplankton and physicochemical factors were monitored monthly in 2017. The results showed that phytoplankton species were detected as 7 phyla, 65 genera, 79 species. According to the functional group classification method, the phytoplankton in XXB could be divided into 21 functional groups, among which C, D, F, G, J, Lo, M, P, X2 and Y were the dominant functional groups. C and P functional groups, which are adapted to high nutrient conditions, dominated throughout the year, indicating that XXB was a moderately eutrophic water body. Functional groups (F, G, X2, Y) preferring less disturbed waters and moderately eutrophic waters during the low flow period became dominant taxa; functional groups (G, J, M) preferring stable eutrophication, tolerating high light intensity and being sensitive to scouring during the high flow period became dominant taxa; functional groups (C, P, D) preferring mixed moderately eutrophic waters, tolerating low light intensity and being sensitive to water stratification during the high flow period became dominant taxa. The compositional structure of phytoplankton functional groups changed significantly with water level fluctuations. The comprehensive trophic state index indicated that XXB was mesotrophic during the storage and flood periods, and eutrophic during the other two periods (39.84≤TSI_M≤60.9). The ecological status index values indicated that the water quality of XXB was “good”. Both indicated a deterioration in water quality with decreasing water levels. RDA analysis showed that water level not only directly affected the phytoplankton functional group, but also significantly affected the dominant phytoplankton functional group and its biomass through other factors such as total nitrogen, transparency, COD_Mn, conductivity and pH. The study confirmed that water level fluctuations had a significant effect on the phytoplankton functional group in Xiangxi Bay and demonstrated the possibility of phytoplankton regulation by reservoir operation.