Periphyton biofilms are natural mixtures comprised of photoautotrophic and heterotrophic complex microorganisms. In this work, the inhibition effects of periphyton biofilms on cyanobacterial blooms were studied in pilot and field trials. Results show that the cyanobacterial species responsible for the blooms had an upper nutrient concentration threshold, below which it could not effectively compete with other organisms in the periphyton. The disappearance of the cyanobacterial blooms was due to the allelopathy between the cyanobacteria and periphyton biofilm. In particular, it was found that the periphyton biofilm could produce water-soluble allelochemicals such as indole and 3-oxo-a-ionone to significantly inhibit the growth of the cyanobacteria. These allelochemicals are able to damage the thylakoid membranes of the cyanobacteria, interrupt the electron transport in photosystem II, decrease effective quantum yields, and eventually lead to the failure of photosynthesis. A comprehensive discussion on the ecological consequences of these findings is also presented. This work demonstrates the potential of periphyton biofilm to be used as an environmentally friendly ecological engineering solution for (i) the control of cyanobacterial blooms and (ii) a transitional means for the construction of beneficial conditions for ecosystem restoration. In addition, this work provides significant insights into the competitive relationships between algae and biofilms.