ABSTRACT: One of the primary challenges of the Water Framework Directive (WFD) of the European Union is to provide a guide for the recovery of surface waters from pollution. However, few studies deal with reference conditions according to the WFD in coastal waters. Using the urbanised Laajalahti Bay (Helsinki, Finland) as an example, reference conditions and pollution history were defined using the stratigraphy of diatoms, sediment geochemistry, stable isotopes, sedimentary pigments, long-term monitoring results of water quality, and nutrient-loading. Principal components analysis was used to generate a multidimensional index of water quality on the basis of the sediment data. We distinguished 5 phases: (1) a pre-industrial phase (before ca. 1815); (2) a phase of slight human disturbance (ca. 1815 to 1900); (3) an onset of anthropogenic impact (ca. 1900 to 1955); (4) a severe pollution phase (ca. 1955 to 1975); (5) basin recovery and a phase of internal loading (from ca. 1975 onwards). Phase 2 was used to define reference conditions. Phase 1 was not used as it occurred before the formation of the semi-enclosed bay by post-glacial isostatic land-uplift. There was good agreement between the sedimentary record and the water-quality data during Phase 4. Despite an improvement in water quality after the local municipal treatment plant closed in 1986, Laajalahti Bay is still far from reference conditions due to internal loading.