The influence of seagrasses on water quality was investigated seasonally from permanent stations located along transects across vegetated and formerly vegetated sites in shoal regions of the Chesapeake Bay National Estuarine Research Reserve in Virginia. The effect of the seagrass bed on conditions inside compared to outside the bed varied seasonally and could be related to bed biomass and development. During spring (April to June), the rapidly growing seagrass bed was a sink for nutrients, suspended inorganic particles, and phytoplankton, whereas during the summer, as bed dieback progressed, resuspension and release of nutrients were observed. Reductions in suspended particle concentrations and light attenuation were generally not measurable until bed biomass exceeded 50–100 gdm/m2 or 25–50% vegetative cover. During April, when nitrate levels in adjacent channel waters were observed to be highest (>10 μM), rapid uptake, equivalent to 48% of nitrogen requirements for seagrass growth, reduced inorganic nitrogen standing stocks by 73% within the bed compared to outside of it. An unvegetated site that previously supported seagrass demonstrated little capacity to reduce measurable levels of suspended particles or nutrients, and resuspension of bottom sediments contributed to higher levels of suspended particle concentrations and turbidity in the unvegetated shallows compared to adjacent waters. The capacity of seagrass beds to improve local water-quality conditions, such as turbidity and nutrients, during the spring when suspended particle concentrations are highest may be key to their continued long-term survival in this lower bay region. High levels of spring turbidity, which have been related to seagrass declines in this area, can be mediated by dense seagrass structure, but largely unvegetated areas are unlikely to modify conditions to permit survival of first-year recruits or transplants through the summer. Therefore, water-quality conditions that are suitable for recovery are likely greater than those required for continued survival of existing seagrass beds. Given this, statistically derived estimates of water-quality conditions or habitat requirements that are usually obtained from measurements in areas adjacent to existing seagrass beds should be used with caution. Although suitable for predicting the maintenance of existing beds with adequate biomass and structure, they may underestimate the levels needed for restoration and recovery of many currently unvegetated sites.