Annual variations of water qualities in the Shihwa Lake were observed from 1996 to 2007. A anoxic condition was developed in the Shihwa Lake, a man-made enclosure of the coastal embayment by dike construction off Shiheung and Ansan, Gyeonggi do, Korea. After the flow of the outer seawater through the water gate, the surface salinity in Shihwa Lake increased to the range of 25-30psu after October 1998. Due to the declination of the salinity differences between the surface and the bottom water, the pycnocline in which had existed until 1997 has weakened, and made the water column mix vertically. This led to the improvement of anoxic/hypoxic environment at bottom waters after April 1998. However, despite the continuous flow of the outer seawater, the concentrations of chlorophyll-a at surface layer were very high, indicated the eutrophication. The following organic matter load was greatly influencing the surface layer's COD concentration. During the rainy season, the salinity at the surface layer fell below 15psu resulting in stratification between the surface and bottom layer. Organic matters that were provided from the surface layer to the bottom layer due to active primary production in the year exhausted dissolved oxygen at the bottom layer, and the bulks of organic matters at bottom gave rise to hypoxic or anoxic environment. It was observed that the enrichment of ammonia and phosphate were main factors to worsen the water quality of the Shihwa Lake.