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Remote sensing monitors water quality information with wide coverage to monitor spatial change of water bodies easily. Landsat TM has high spatial resolution of 30 meters to monitor details of water bodies. MODIS has its advantage with frequent return visits to monitor algae blooms. Lake Taihu is the third largest freshwater lake in China with cyanophytes blooms annually, which dominates the water sources of Wuxi and Suzhou. The pollution of Taihu Lake has become more and more serious, which leads to contaminated drinking water in Wuxi and Suzhou city. This paper applies 250-meter MODIS level 1B images and Landsat-5 TM images to detect algae blooms, also uses a simplified bio-optical model to estimate concentration of chlorophyll-a in Lake Taihu. The results showed the distribution of algae blooms and chlorophyll a concentration in Lake Taihu at 29th July to 1st August of 2006. The algae blooms often appear at the north and the west of Lake Taihu, which agree with the actual situation. The chlorophyll-a concentrations estimated from MODIS and TM imagery are in appropriate value range in Lake Taihu in summer. The relative errors between in-situ measured and estimated chlorophyll-a concentrations are less than 30%. This study could be helpful to monitor water quality with remote sensing imagery just having red and near-infrared channels such as 250-meter MODIS imagery.