Coastal waters are often influenced by seawater intrusion and terrestrial emissions because of its special location. In this study, the dynamics of microbial community with the role of nitrogen cycle in sediment in a coastal eutrophic lake were studied under a warm season. The water salinity gradually increased from 0.9‰ in June to 4.2‰ in July and 10.5‰ in August because of seawater invasion. Bacterial diversity of surface water was positively related with salinity and nutrients of total nitrogen (TN) as well as total phosphorus (TP), but eukaryotic diversity had no relationship with salinity. In surface water, algae belonging to Cyanobacteria and Chlorophyta were dominant phyla in June with the relative abundances of >60%, but Proteobacteria became the largest bacterial phylum in August. The variation of these predominant microbes had strong relationship with salinity and TN. In sediment, the bacterial and eukaryotic diversity was greater than that of water, and a significantly different microbial community was observed with dominant bacterial phyla Proteobacteria and Chloroflexi, and dominant eukaryotic phyla Bacillariophyta, Arthropoda, and Chlorophyta. Proteobacteria was the only enhanced phylum in the sediment with the highest relative abundance of 54.62% ± 8.34% due to seawater invasion. Denitrifying genera (29.60%–41.81%) were dominant in surface sediment, then followed by microbes related to nitrogen fixation (24.09%–28.87%), assimilatory nitrogen reduction (13.54%–19.17%), dissimilatory nitrite reduction to ammonium (DNRA, 6.49%–10.51%) and ammonification (3.07%–3.71%). Higher salinity caused by seawater invasion enhanced the accumulation of genes involved in dentrificaiton, DNRA and ammonification, but decreased genes related to nitrogen fixation and assimilatory nitrogen reduction. Significant variation of dominant genes of narG, nirS, nrfA, ureC, nifA and nirB mainly caused by the changes in Proteobacteria and Chloroflexi. The discovery of this study would be helpful to understand the variation of microbial community and nitrogen cycle in coastal lake under seawater intrusion.