Variation in hydrologic regimes in subtropical lakes and wetlands strongly influences biodiversity and value to human users. Lake Okeechobee, Florida, has a 450-km² littoral landscape that supports a diverse assemblage of aquatic vegetation that provides critical habitat for fish and wildlife. Water level is one of the primary factors affecting the composition of aquatic vegetation and its associated faunal assemblages at Lake Okeechobee. We summarized published literature regarding the effects of water-level variation on subtropical wetland and littoral plants, as well as the fish and other biota supported by those plant communities, with an emphasis on shallow lakes and wetlands occurring at latitudes generally similar to Lake Okeechobee. The objective of this study was to enhance the information base that supports the CERP (Comprehensive Everglades Restoration Plan) hydrologic performance goals for this large lake ecosystem. Our results demonstrate that high water/prolonged flooding at lake stages exceeding 5.1 m msl (mean sea level) will cause substantial loss of aquatic and wetland plants at Lake Okeechobee, which will negatively impact fish and wildlife populations. Conversely, very low water (< 3.7 m msl) on a regular basis may favor expansion of native plants but also torpedograss, Panicum repens (a non-native), which would require more intensive control programs. If Okeechobee lake stage varies between 3.7 and 4.6 m msl in most years, littoral and near-shore zones can be expected to develop diverse and widespread stands of emergent and submerged aquatic vegetation. If these changes occur, we predict that largemouth bass (Micropterus salmoides) and other fish species, alligators (Alligator mississippiensis), wading birds, and snail kites (Rostrhamus sociabilis) would all positively respond due to enhanced habitat structure and food resources.