Rural shrimp farmers in Thailand are being encouraged to adopt practices that will reduce the quantity and improve the quality of their effluent. A simple and cheap option for small-scale shrimp farmers is to use settlement ponds to store and remediate discharge water before being re-used. We undertook a detailed study of the settlement ponds in a small-scale commercial black tiger shrimp farm typical of rural Thailand. We found that over a 9-week period, following the harvest of one of the two farm production ponds, total nitrogen (TN) concentrations in the water column were reduced by 30%, with the greatest removal (56%) occurring during the fifth week. There was a 10% increase in dissolved organic nitrogen (DON) concentrations during the trial. Sediments were a source of total ammonia nitrogen (TAN), and the re-mineralisation rate was the highest in the first two settlement ponds. Coconut fronds added to two of the four settlement ponds to increase the surface area available for microbial activity were found to provide a site for microbial re-mineralisation of TAN, the photosynthetic uptake of TAN and oxidised nitrogen (NOx) and nitrification. The water column was a net assimilator of TAN through autotrophic uptake. This study has shown that settlement ponds are capable of reducing water column N concentrations; however, sediment must be managed to reduce re-mineralisation during successive cropping cycles. In addition, coconut fronds were shown to improve N removal, although they should be periodically removed to maintain efficiency.