In lakes, suspended inorganic particles and dissolved substance are able to absorb or scatter different light wavelengths, leading to the changes of underwater light spectra which are highly related to the water quality. In turn, such changes could form environmental filtering for phytoplankton community to select particular algal populations via intensive competition for light resources. As an example, eutrophic lakes where underwater light spectra changed dramatically have a result of cyanobacterial blooms. In this study, in order to test the effect of light spectrum on growth and competition of green algae and cyanobacteria, Chlorella pyrenoidosa (a common green alga) and Microcystis aeruginosa (a bloom-forming cyanobacterium) grew and competed under three light colors: white (400–700 nm), red (620–700 nm), and blue (410–490 nm) light. Mono- and co-cultured systems were designed and population dynamics of the two species were monitored. The Lotka-Volterra model was used to quantify interspecific competition. Moreover, their photosynthetic activities were measured in mono-cultures. Results showed that in mono-cultures, red light was more favorable for M. aeruginosa , while blue light promoted the growth of C. pyrenoidosa . In co-cultures, M. aeruginosa won in red light and white light, while C. pyrenoidosa dominated under blue light. Light color mainly affected the absorption flux of reaction center (ABS/RC) in photosynthetic system II (PSII) and its potential photosynthetic capacity ( F v / F m ). F v / F m of M. aeruginosa in red light (or C. pyrenoidosa in blue light) was significantly enhanced. This study revealed that light color showed a significant influence on interspecific competition between green algae and cyanobacteria, which offers new insights into the dominance establishment and bloom formation of Microcystis .