Sishili Bay is the most important aquiculture and tourism area for the city of Yantai, China; however, red tides occurred frequently and have caused huge economic losses in this bay in recent years. To gain a better understanding of the local ecological environments in the bay, we conducted this research between 2003 and 2008 to analyze variations in nutrients and chlorophyll (chl-a) during high frequency red tide period (May to September). The results show that the chl-a concentration increased from 2.70 in 2003 to 7.26 mg/m3 in 2008, while the concentration of total inorganic nitrogen (TIN) and silicate (SiO3-Si) increased lineally from 5.18 and 1.45 pmol/L in 2003 to 18.57 and 9.52 pmol/L in 2008, respectively, and the annual phosphate (PO4-P) varied between 0.15 and 0.46 μmol/L. Special attention was given to a red tide in August 2007 occurred when water temperature was high and nutrient concentrations increased sharply because of a heavy rainfall. Overall, the results show the P limitation in Sishili Bay, and reveal that red tides were caused by eutrophication from terrestrial inputs and local warm weather, particularly during rainy periods. Therefore, to control red tide, greater efforts should be made to reduce sewage discharges into Sishili Bay, particularly during rainfall seasons.