Masan bay is one of the polluted enclosed bays, which has red tides problem and the formation of oxygen deficient water in the bottom layer. Most important factors that cause eutrophication and red tide is nutrient materials containing nitrogen and phosphorus which stem from terrestrial sources and nutrients released from sediment. Therefore, to improve of water quality, reduction of these nutrient loads should be indispensible. At this study, the three-dimensional numerical hydrodynamic and eutrophication model, which were developed by Institute for Resources and Environment of Japan, were applied to analyze the processes affecting the phytoplankton production and also to evaluate the effect of water quality improvement plans on phytoplankton production. in field survey, the range of concentrations of chlorophyll -a at surface area was found to be 29.17 - 212.5㎎/㎥, which were exceeding eutrophication criteria. The constant currents defined by integrating the simulated tidal currents over 1 tidal cycle showed the counterclockwise eddies in the southern part of Budo. The general directions of constant currents were found to be southward at surface and northward at bottom over all the bay. The eutrophicatior model was calibrated with the data surveyed in the field of the study area in June, 1993 The calculated results are in fairly good agreement with the observed values within relative error of 30%. The pollutantI load from the sources such as the input from terrestrial sources and release from the sediment was reduced by the rate of 50, 70, 90, 98% to evaluate the effect of phytoplankeon production. Phytoplankton production was reduced to 50% in case of the 90% reduction of the input loads from terrestrial sources and 8% in case of the 90% reduction of the load from sediment.