One of the water source areas of the South-to-North Water Diversion Project is the Danjiangkou Reservoir (DJKR). To understand seasonal variation in phytoplankton composition, abundance and distribution in the DJKR area before water diversion, as well as to estimate potential risks of water quality after water diversion, we conducted an investigation on phytoplankton in the DJKR from August 2008 to May 2009. The investigation included 10 sampling sites, each with four depths of 0.5, 5, 10, and 20 m. In this study, 117 taxa belonging to 76 genera were identified, consisting of diatoms (39 taxa), green algae (47 taxa), blue-green algae (19 taxa), and others (12 taxa). Annual average phytoplankton abundance was 2.01 × 106 ind./L, and the highest value was 14.72 × 106 ind/L (at site 3 in August 2008). Phytoplankton abundance in front of the Danjiangkou Dam (DJKD) was higher than that of the Danjiang Reservoir Basin. Phytoplankton distribution showed a vertical declining trend from 0.5 m to 20 m at most sites in August 2008 (especially at sites of 1, 2, 4 and 10), but no distinct pattern in other sampling months. In December 2008 and March 2009, Stephanodiscus sp. was the most abundant species, amounting to 55.23% and 72.34%, respectively. We propose that high abundance of Stephanodiscus sp. may have contributed greatly to the frequent occurrence of Stephanodiscus sp. blooms in middle-low reaches of the Hanjiang River during the early spring of 2009. In comparison with previous studies conducted from 1992 to 2006, annual average phytoplankton density, green algae and blue-green algae species, as well as major nutrient concentrations increased, while phytoplankton diversity indices declined. This indicates a gradual decline in water quality. More research should be conducted and countermeasures taken to prevent further deterioration of water quality in the DJKR.