Harmful cyanobacterial blooms frequently occur in shallow eutrophic lakes and usually cause the decline of submerged vegetation. Therefore, artificial aquatic plants (AAPs) were introduced into enclosures in the eutrophic Dianchi Lake to investigate whether or not they could reduce cyanobacterial blooms and promote the growth of submerged macrophytes. On the 60th day after the AAPs were installed, the turbidity, total nitrogen (TN), total phosphorous (TP), and the cell density of phytoplankton (especially cyanobacteria) of the treated enclosures were significantly reduced as compared with the control enclosures. The adsorption and absorption of the subsequently formed periphyton biofilms attached to the AAPs effectively decreased nutrient levels in the water. Moreover, the microbial diversity and structure in the water changed with the development of periphyton biofilms, showing that the dominant planktonic algae shifted from Cyanophyta to Chlorophyta. The biodiversity of both planktonic and attached bacterial communities in the periphyton biofilm also gradually increased with time, and were higher than those of the control enclosures. The transplanted submerged macrophyte (Elodea nuttallii) in treated enclosures recovered effectively and reached 50% coverage in one month while those in the control enclosures failed to grow. The application of AAPs with incubated periphyton presents an environmentally-friendly and effective solution for reducing nutrients and controlling the biomass of phytoplankton, thereby promoting the restoration of submerged macrophytes in shallow eutrophic waters.