Australia’s wetlands are threatened by climate change, with declining water levels in many locations likely to continue in response to decreases in effective moisture projected under future warming scenarios. Therefore, there is a need to understand lake ecosystem responses to hydrological change and to better understand their resilience to climate change and threats of increased periods of drought. Here we describe an analysis of the interannual variability of phytoplankton and zooplankton community composition in Swallow Lagoon a small (ca. 0.3 ha) subtropical dune lake on Minjerribah (North Stradbroke Island) off the eastern coast of Australia. Perched amongst Pleistocene dunes approximately 154 m above sea level, it is isolated from the regional water table. With no inflow or outflow streams, the balance of precipitation over evaporation determines lake volume. Few studies have addressed shallow dune lakes in the humid subtropics, which are typical of coastal lacustrine wetlands in the region which include the Cooloola Sand Mass, K’gari (Fraser Island) and Mulgumpin (Moreton Island). We followed the lake through cycles of drying and filling from 2016 to 2023 to understand the response of phytoplankton and zooplankton communities to fluctuating hydrological regimes and coupled environmental drivers such as allochthonous humic dissolved organic matter (DOC), light climate, mixing regime, and water quality. Phytoplankton communities showed a steady increase in within-year dissimilarity between samples from 2016 to 2023, indicating growing temporal variability, particularly following substantial lake level rises in 2020–2021. However, changes in assemblage composition between years were relatively subtle, suggesting increasing variability within years rather than major shifts in dominant taxa. Zooplankton communities exhibited a different pattern with a pronounced spike in within-year variability in 2019 during the lowest lake level, followed by a sharp reduction in dissimilarity between samples in 2020–2021. Unlike phytoplankton, our results indicated a notable shift in zooplankton assemblage composition between years, particularly during and shortly after the 2019 drought period. These results suggest that phytoplankton respond gradually to hydrological changes through increased compositional heterogeneity, while zooplankton exhibit more abrupt shifts in both temporal variability and community structure. This highlights how water level fluctuations can differentially influence plankton dynamics and ecosystem stability in small lakes and how potential climate change impacts need to be explicitly considered across trophic levels.