We studied the bio-optical properties and sediment dynamics of typical phytoplankton-dominated (PD) and macrophyte-dominated (MD) regions in shallow Lake Taihu in China, from long-term site-specific studies and short-term high-frequency observations. The long-term studies showed that five parameters were significantly lower in the MD region than in the PD region: photosynthetically active radiation (PAR) diffuse attenuation coefficient (Kd(PAR)), concentrations of total suspended matter (CTSM), tripton (CTripton), and phytoplankton pigment (CChla+Pa), and CDOM absorption coefficient (aCDOM(350)). In winter in the MD region, with only scarce submerged aquatic vegetation (SAV) coverage, the Kd(PAR), CTSM, and CTripton were significantly higher than in the PD region with no SAV; in contrast, CChla+Pa and aCDOM(350) were significantly lower in the MD region than in the PD region. In the other three seasons with high SAV coverage, Kd(PAR), CTSM, CTripton, CChla+Pa, and aCDOM(350) were all significantly lower in the MD region than in the PD region. The appearance and growth of SAV decreased CTSM, CTripton, and Kd(PAR). The short-term high-frequency study showed that phytoplankton and tripton absorption coefficients were significantly lower in the MD region than in the PD region. In the PD region, there were highly significant exponential relationships between wind speed, wave height, and wave shear stress, and CTripton and Kd(PAR), showing that wind-driven sediment resuspension could significantly affect both the tripton concentration and PAR attenuation. However, in the MD region, there were only weakly significant correlations, or no significant correlations, between wind speed, wave height, and wave shear stress, and CTripton, and Kd(PAR). The combination of the long-term site-specific and short-term high-frequency observations is an excellent tool for study of the bio-optical properties in lake environments.