Terrestrial particulate nutrients transported during flood events are known to indirectly fuel phytoplankton blooms in rivers, lakes and coastal waters, although the mechanisms are poorly understood. Quantifying the response of phytoplankton to nutrients in sediments eroded from catchments is fundamental to prioritizing areas for erosion control. This study developed a novel bioassay technique for rapidly assessing the effects of nutrients released from suspended sediments on the growth of marine and freshwater phytoplankton communities. A range of sediment slurries were placed in bioassay bottles within dialysis tubing in the presence of phytoplankton and their photosynthetic efficiency (Fv/Fm) was measured over 72 h. This allowed an assessment of the effects of dissolved nutrients released from sediments without the confounding effects of suspended sediments. Chlorophyll a concentrations were also measured for comparison with Fv/Fm. Our study showed Fv/Fm was an effective method for measuring phytoplankton responses to sediment slurries. Photosynthetic efficiency was a more sensitive response metric than chlorophyll a. Applying the method to a range of suspended sediments from two tropical catchments in Australia that drain into Great Barrier Reef coastal waters, we identified a subset of sediment types (~40%) that increased Fv/Fm under the bioassay conditions. These sediments have the potential to stimulate marine and freshwater phytoplankton growth under the loads simulated in this study. The bioassay has the advantage of being a rapid and relatively simple method where a large number of sediments can be simultaneously tested for a phytoplankton response. To our knowledge this is the first time Fv/Fm has been used to assess phytoplankton responses to sediments in a bioassay. This approach advances the use of Fv/Fm as a sensitive indicator of phytoplankton responses to nutrients and could be used to develop indices of the relative risk various sediments pose, hence support decision making for erosion control measures.