Urban runoff and effluent discharge from heavily populated coastal areas can negatively impact water quality, beneficial uses, and coastal ecosystems. The planned release of treated wastewater (i.e. effluent) from the City of Los Angeles Hyperion Wastewater Treatment Plant, located in Playa del Rey, California, provided an opportunity to study the effects of an effluent discharge plume from its initial release until it could no longer be detected in the coastal ocean. Non-metric multi-dimensional scaling analysis of phytoplankton community structure revealed distinct community groups based on salinity, temperature, and CDOM concentration. Three dinoflagellates (Lingulodinium polyedrum, Cochlodinium sp., Akashiwo sanguinea) were dominant (together >50% abundance) prior to the diversion. Cochlodinium sp. became dominant (65–90% abundance) within newly surfaced wastewater, and A. sanguinea became dominant or co-dominant as the effluent plume aged and mixed with ambient coastal water. Localized blooms of Cochlodinium sp. and A. sanguinea (chlorophyll a up to 100 mg m−3 and densities between 100 and 2000 cells mL−1) occurred 4–7 days after the diversion within the effluent plume. Although both Cochlodinium sp. and A. sanguinea have been occasionally reported from California waters, blooms of these species have only recently been observed along the California coast. Our work supports the hypothesis that effluent and urban runoff discharge can stimulate certain dinoflagellate blooms. All three dinoflagellates have similar ecophysiological characteristics; however, small differences in morphology, nutrient preferences, and environmental requirements may explain the shift in dinoflagellate composition.