Eutrophication of the Baltic Sea has potentially increased the frequency and magnitude of cyanobacteria blooms. Eutrophication leads to increased sedimentation of organic material, increasing the extent of anoxic bottoms and subsequently increasing the internal phosphorus loading. In addition, the hypoxic water volume displays a negative relationship with the total dissolved inorganic nitrogen pool, suggesting greater overall nitrogen removal with increased hypoxia. Enhanced internal loading of phosphorus and the removal of dissolved inorganic nitrogen leads to lower nitrogen to phosphorus ratios, which are one of the main factors promoting nitrogen-fixing cyanobacteria blooms. Because cyanobacteria blooms in the open waters of the Baltic Sea seem to be strongly regulated by internal processes, the effects of external nutrient reductions are scale-dependent. During longer time scales, reductions in external phosphorus load may reduce cyanobacteria blooms; however, on shorter time scales the internal phosphorus loading can counteract external phosphorus reductions. The coupled processes inducing internal loading, nitrogen removal, and the prevalence of nitrogen-fixing cyanobacteria can qualitatively be described as a potentially self-sustaining “vicious circle.” To effectively reduce cyanobacteria blooms and overall signs of eutrophication, reductions in both nitrogen and phosphorus external loads appear essential.