Environmental dredging is a primary remedial option for removal of the contaminated material from aquatic environment. Of primary concern in environmental dredging is the effectiveness of the intended sediment removal. A 5-year field monitoring study was conducted to assess the effectiveness of the environmental dredging in South Lake, China. The concentrations of total nitrogen (TN), total phosphors, and heavy metals (Zn, Pb, Cd, Cu, Cr, Ni, Hg, and As) before and after dredging in sediment were determined and compared. Multiple ecological risk indices were employed to assess the contamination of heavy metals before and after dredging. Our results showed that the total phosphorus levels reduced 42% after dredging. Similar changes for Hg, Zn, As Pb, Cd, Cu, Cr, and Ni were observed, with reduction percentages of 97.0, 93.1, 82.6, 63.9, 52.7, 50.1, 32.0, and 23.6, respectively, and the quality of sediment improved based on the criterion of Sediment Quality Guidelines by USEPA and contamination degree values (Cd) decreased significantly (paired t-test, p < 0.05). Unexpectedly, the TN increased 49% after dredging compared to before dredging. Findings from the study demonstrated that the environmental dredging was an effective mechanism for removal of total phosphorus and heavy metals from South Lake. Nevertheless, the dredging was ineffective to remove total nitrogen from sediment. We conclude that the reason for the observed increase in TN after dredging was likely ammonia release from the sediment impairing the dredging effectiveness.