This study assessed the spatio-temporal dynamics of the phytoplankton community in backwaters of the Ketar River, central Ethiopia, in relation to water quality and macrophyte coverage. Phytoplankton samples and physicochemical information were collected at six sites along the river over 1 year (December 2017 to November 2018). Phytoplankton was collected using a 15-μm mesh net. A total of 56 species belonging to three algal phyla were identified; the most diverse phylum was Bacillariophyta (35 species), followed by Chlorophyta (13 species) and Euglenophyta (eight species). Bacillariophyta had the highest abundance and contributed 80.08% of the total phytoplankton abundance. Site 6 in the downstream portion had the highest abundance and greatest diversity of phytoplankton species. The algal phyla present showed significant differences in species diversity and abundance both spatially and temporally. Redundancy analysis results revealed that the spatial distribution of phytoplankton in the river positively correlated with pH, electrical conductivity, dissolved oxygen and nitrate-nitrogen, while water temperature and total suspended solids correlated negatively. Some indicators of organic pollution suggest that the water quality of the river is progressively declining, meriting close monitoring.