Aquatic vegetation positively influences the habitat conditions of aquatic organisms, organic matter, and nutrient cycling. However, excessive growth can lead to water stagnation, thermocline formation, and reduced levels of dissolved oxygen (DO). This study investigated the effects of abundant aquatic vegetation on DO and dissolved organic matter (DOM) in Lake Biwa, Japan’s largest lake. Surveys were conducted at six locations in the lake: three control sites with minimal vegetation, two sites with dense submerged aquatic vegetation, and one site dominated by floating-leaved plants. At each location, water temperature, DO concentration, pH, chlorophyll-a, and DOM were measured. Additionally, DO loggers were deployed near a control site and a site with abundant submerged vegetation to monitor diurnal variations in DO. At sites with dense submerged aquatic vegetation, DO saturation in the bottom layer frequently fell below 100% during early morning hours, indicating respiration activity by submerged plants. Conversely, DO saturation exceeded 100% during the afternoon, reflecting photosynthetic oxygen production. Elevated concentrations of high molecular weight DOM, which microorganisms readily utilize, were notable at sites with submerged vegetation. In contrast, at the site with abundant floating-leaved plants, DO saturation consistently remained below 100% in both the surface and the bottom layers. This trend can be attributed to the extensive coverage by water chestnut limiting oxygen exchange with the atmosphere and suppressing phytoplankton photosynthesis. On the basis of these findings, we conclude that continuous decline in DO concentration is relatively unlikely at sites with submerged vegetation but poses a higher risk at sites dominated by floating-leaved plants. Submerged vegetation contributes to lake carbon cycling through photosynthetic oxygen production and associated release of bioavailable DOM.