AbstractMicrocystin is one of the most common toxins associated with freshwater harmful algal blooms, but little is known about microcystin fate in the aquatic environment. Laboratory wave tank experiments were performed to determine whether exchange of surface water and pore water (benthic exchange) removes and dilutes microcystin‐LR (MC‐LR) at environmentally relevant concentrations in coastal waters overlying permeable sediments. Over the 100 h experiment, 60% of MC‐LR mass was removed due to interaction with sediment (via adsorption and/or biodegradation), while only 20% was removed in an experiment without sediment. The observed fate and transport of MC‐LR in sediments was adequately described with a one‐dimensional reactive transport model that uses an enhanced diffusion coefficient to represent benthic exchange of solutes. Numerical sensitivity studies showed that MC‐LR removal increases with hydraulic conductivity of sediment and wave height and decreases with water depth. For MC‐LR concentration at the WHO recreational guideline (20 ppb), sandy sediments can remove the equivalent MC‐LR mass in 1 m of surface water under typical nearshore wave conditions within tens of hours. In open water at large depths above a silty bed, removal times are much longer (on the order of weeks). Wave‐driven benthic exchange is therefore an important control on MC‐LR fate in energetic coastal areas but not in deep or calm settings where sediment–water interactions are greatly reduced. The nearshore fate of algal toxins is important to human health and socioeconomic vitality, since recreational activities and direct human exposures are concentrated along coasts.