Littoral zones are characterized by gradients in depth and vegetation biomass, influencing nutrient retention capacity. A field experiment was conducted in a Phragmites australis dominated littoral zone to investigate nutrient retention and its effect on surface water quality. Measurements were done in mesocosms where water levels could be manipulated. Nutrient status was investigated along a gradient perpendicular to the shore during two growing seasons, one with a stable water level and one with a gradually decreasing water level. Nutrient concentrations in sediment, soil pore water and surface water were significantly lower in the vegetated than in the unvegetated zone. The negative correlations of nutrients in sediment and water, with nutrient contents of the vegetation suggest a direct effect of the vegetation. Nutrient uptake and biomass of the vegetation was higher in continuously flooded soils than in seasonally emerging sediments higher along the littoral gradient, probably due to the increased salinity in drained zones. Denitrification rate was highest in the unvegetated zone and was positively related to water level. Flooded littoral zones did result in a higher nutrient retention than drained zones. On small scale, for an optimal nutrient retention a fluctuating regime is not necessarily better suited than a stable water level, but on a larger scale it can substantially increase the width of the vegetated zone. It is important to optimize conditions for helophyte growth since the positive effect of vegetation on nutrient retention, at least at local scale, has been demonstrated in this study.