Eighty one algal taxa comprising of 24 species of Cyanophyta, 2 Rhodophyta, 19 Chlorophyta, 6 Euglenophyta and 30 Bacillariophyceae under Heterokontophyta were recorded in Chilika lagoon in different seasons of 2010-2011 in a survey after opening of new mouth to Bay of Bengal. Of these Cyanobacterium diachlloros, Aphanocapsa marina, Microsystis aeruginosa, Microsystis wesenbergii, Pseudanabena limnetica, Arthospira ambiguum, Oscillatoria perornata, Oscillatoria proteus, Oscillatoria simplicissima under Cyanophyta, Scenedesmus bijugatus, Urenema elongatum under Chlorophyata, Trachelomonas abrupt, Trachelomonas hispida under Euglenopyta and Coscinodiscus subtilis, Navicula amphirhynchus, Navicula major, Gomphonema micropus, Gomphonema olivaceu, Gomphonema sphaerophorum, Cyclotella meneghiniana, Pinnularia subsimilis, Pleurosigma javanicum, Stephanophyxis turris, Synendra tabulata, Stauroneis pusilla and Cymbella affinis under Bacillariophyceae of Heterokontophyta recorded in the survey have not been reported in the lake before opening of the mouth. Maximum number of algal species was observed in winter followed by summer and post monsoon seasons. Northern sector showed maximum algal diversity followed by Central, Southern and Outer channel sectors. The Cyanophytes followed by Chlorophytes were rich in Northern, Central and Southern sectors where as the diatoms were abundant in Outer channel sector and Northern sector. The agarophyte Gracilaria verrucosa recorded in the Outer channel sector of the lagoon for the first time showing extended distribution of the species due to increase in salinity coupled with consistent wave action in the lagoon after opening of the new mouth.