Environment Southland says the algae was found in the Waihopai River at the dam upstream of Queens Drive.
Senior scientist Katie Blakemore said water users should be vigilant and avoid contact with the algae.
“This is a particularly popular spot for dog walkers and many people walk their dogs off the lead in the area.
"Pet owners should take extra care in this area, and all the way along the Waihopai River as ingesting just a small amount can be toxic to dogs.”
Toxic algae in waterways was commonly a dark green/brown slime on rocks, or dark brown/black mats at the water’s edge.
Swimming at this location should also be avoided, she said.
“These algae can produce toxins that are harmful to people and animals if swallowed, or through contact with skin. People should keep dogs on a lead and children away from affected areas. Be mindful of the potential health risks, until health warnings are removed.”
Toxic algae warnings are also in place for the Waihopai River at Kennington and the Waiau River at upstream of Excelsior Creek.
