Impacts of chemical contaminants associated with dumping of dredged urban river sediments at a coastal disposal area in Saronikos Gulf (Eastern Mediterranean) were investigated through a combined approach of sediment toxicity testing and active biomonitoring with caged mussels. Chemical analyses of aliphatic hydrocarbons (AHs), polycyclic aromatic hydrocarbons (PAHs), Cu, and Zn in combination with the solid phase Microtox® test were performed on sediments. Concentrations of PAHs, AHs, Cu, and Zn as well as multiple biomarkers of contaminant exposure and/or effects were measured in caged mussels. Sediments in the disposal and neighboring area showed elevated PAHs and AHs concentrations and were characterized as toxic by the solid-phase Microtox® test during and after dumping operations. Biomarker results in the caged mussels indicated sublethal effects mainly during dumping operations, concomitantly with high concentrations of PAHs and AHs in the caged mussel tissues. Cu and Zn concentrations in sediments and caged mussels were generally not elevated except for sediments at the site in the disposal area that received the major amount of dredges. High PAHs and AHs levels as well as sublethal effects in the caged mussels were not persistent after termination of operations. The combined bioassay-biomarker approach proved useful for detecting toxicological impacts of dredged river sediment disposal in sediments and the water column. Nevertheless, further research is needed to evaluate whether sediment toxicity will have long-term effects on benthic communities of the disposal area.