Phytoplankton is the dominant primary producer in aquatic ecosystems and is considered a gauge of ecological condition and change. Some phytoplankton groups, namely diatoms, dinoflagellates, and coccolithophores, produce morphological or chemical fossils that can be used for paleoenvironmental reconstruction. This study aims to review the processes that regulate dynamics in living phytoplankton and to highlight how this knowledge is used in paleoecological studies. The distribution patterns of phytoplankton in present-day aquatic ecosystems are shaped by the interplay between processes that regulate cell growth and cell death. Cell growth and cell death are regulated by the internal environment of phytoplankton (e.g., specific environmental tolerances, resource uptake properties, cell size, density and morphology, alternative nutritional strategies such as mixotrophy or N2 uptake, motility, intracellular storage capacities, grazing resistance properties), and by its external environment. The external environment includes variables dependent on the availability of resources (e.g., light intensity, concentration of CO2 and dissolved inorganic macronutrients and micronutrients, availability of living prey in case of mixotrophs) and variables independent of resources (e.g., temperature, salinity, turbulence, ultraviolet radiation, bioactive compounds, activity of grazers, viruses, and eukaryotic parasites). The importance of recently described loss processes, such as grazing by phagotrophic protists, viral lyses, and programmed cell death, is discussed in the context of its potential impact upon phytoplankton vertical fluxes. Examples of the use of different phytoplankton metrics (e.g. abundance, species composition, species morphology, and elemental composition) to infer contemporaneous as well as past environmental and ecological conditions are critically evaluated.