Macrophyte-dominated eutrophication (MDE) poses great challenges to lake management. However, macrophyte overgrowth research has been mainly confined to the field of invasion ecology, and eutrophication research has been primarily limited to phytoplankton-dominated eutrophication. In this study, the impacts of macrophytes on the internal N cycle were studied utilizing inference statistics with field-scale observation data from several deliberately selected contrasting regions (i.e., with and without macrophytes and with and without water flow) in 13 semiconnected sublakes in a single large MDE lake based on the before–after–control–impact analysis method. The t test between the impact and control regions, combined with the macrophyte N stock variation and the vertical sediment N diffusion analysis, indicates that macrophyte biodynamics, not physiochemical dynamics, dominate the sustainable internal N cycle, leading to macrophyte overgrowth in MDE lakes. Sediment N is absorbed and stored in macrophytes during the growing season and then begins to return to sediment during the withering period, forming a sustainable internal N cycle. Therefore, the restoration of eutrophication should emphasize limiting the self-enforced “sediment–macrophyte” N cycle rather than controlling only water N content or sediment N release. A practical strategy was proposed using the synergetic considerations of both the sediment N removal efficiency and the ecological interruptions.