The aim of this work was to assess the water quality of the urban lagoon located in Parque Unzué (Gualeguaychú, Argentina) using physico-chemical and bacteriological parameters, the composition of micro-phytoplankton assemblages and functional groups (FGs) and to evaluate their annual variability. Twenty-two samplings in three stations were collected between 2015 and 2018, physico-chemical and bacteriological parameters were measured and micro-phytoplankton (20-200 µm) was collected, identified to the lowest taxonomic level and classified in functional groups. Physico-chemical and bacteriological parameters indicated that the lagoon presented high organic pollution and no significant differences (p < 0.05) were observed between sampling stations, but there were differences between the annual periods of sampling. In general, a detriment to water quality can be seen from 2015 to 2018. This was observed in the simplified water quality index (SWQI) values. Micro-phytoplankton assemblages were compounded by 48 genera distributed into Bacillariophyceae (19), Chlorophyceae (12), Cyanophyceae (7), Euglenophyceae (5), Conjugatophyceae (Zygnematophyceae) (3) and Dinophyceae (1). The Chlorophyceae group was the most sensitive to changes in the system and specifically, the genus Chlorella was an early warning indicator. Nineteen FGs were identified, and the majority were characteristic of hypereutrophic, small, turbid and highly enriched lagoons. We conclude that the lagoon located in Parque Unzué showed permanent organic pollution that kept increasing throughout the study time and therefore, that it is possible that the current conditions lead to the collapse of the system.