Abstract Hydrologic management of shallow lakes is often undertaken to prevent fluctuations in lake level, and to ensure sufficient water volume for economic, domestic, and recreational uses, but there is inconsistent evidence of whether lake‐level stabilisation through hydrological management promotes or hinders eutrophication. Here we used multi‐proxy paleolimnological assessments of water quality (sedimentary carbon, nitrogen, total phosphorus, fossil pigments), and zooplankton community ecology (fossil Cladocera assemblages), combined with Landsat‐derived estimates of lake surface area in two shallow eutrophic lakes, in the Prairies of southern Saskatchewan, Canada, to quantify how 8 decades of contrasting hydrological management strategies (continuous or intermittent) affect primary production and phytoplankton composition. Analysis revealed that irregular hydrological management of Pelican Lake led to sharp increases in primary production concomitant with lake‐level decline. In contrast, continuously managed Buffalo Pound Lake, a drinking water reservoir for regional cities, exhibited slow, persistent eutrophication over decades despite active regulation of water levels. In both lakes, strong correlations of δ 15N values with pigments from diazotrophic cyanobacteria (canthaxanthin) showed that N2‐fixation increased during eutrophication irrespective of the timing of change. Finally, variation in fossil cladoceran density and composition reflected changes in pelagic and littoral habitats (e.g., reduced macrophyte cover) due to changes in both lake level and water quality. Basin comparison shows that while hydrologic management can moderate water quality degradation due to lake‐level change, it does not prevent eutrophication when nutrient influx remains high. Given that regional water availability is forecast to decline in coming decades, we anticipate that continued hydrological management will be unavoidable and will be unable to improve water quality unless nutrient influx is also controlled.