Much of our understanding of the links between biogeochemical processes and ecosystem productivity in freshwater systems has focussed on nutrient concentrations and loads. However, there is growing evidence that terrestrial dissolved organic matter (DOM) may also affect primary productivity, and ultimately water quality. Additionally, studies have shown that terrestrial DOM concentrations are increasing in a range of freshwater systems, which has implications for ecosystem health. Our research focussed on the effect of DOM leachate from leaf litter and terrestrial soil on the productivity of freshwater algae. The leachate contained a complex mixture of dissolved organic compounds including a high proportion of glucose. Leaf leachate inhibited the growth of freshwater algae, with prokaryotic algae, i.e. cyanobacteria, more affected than eukaryotic algae. The amino acid, proline, as well as gallic acid and polyphenols had the greatest inhibitory effect on algal photosynthesis. In a reservoir study, toxic cyanobacterial blooms were also controlled with leaf leachate additions. By contrast, at lower concentrations, leachate from soil and leaves were shown to stimulate growth of algae, either directly from increased dissolved inorganic nutrient concentrations, or indirectly via microbially-mediated transformation of organic nutrients into inorganic nutrients. Our research shows the important role that terrestrial DOM plays in freshwater systems, both directly on algal productivity, and indirectly via the impact on the microbial community. With DOM concentrations increasing globally, the ultimate impact on ecosystem health of freshwaters warrants further investigation.