Small, shallow lakes with dense growth of submerged macrophytes are extremely abundant worldwide, but have remained grossly understudied although open water oxygen measurements should be suitable to determine diel fluctuations and test drivers of ecosystem metabolism during the day. We measured the temporal and spatial variability of environmental conditions as well as net ecosystem production (NEP) and respiration (R) in a small, shallow Swedish lake with dense charophyte stands by collecting data from oxygen-, pH-, temperature- and light-sensors across horizontal and vertical gradients during different periods between April and June in 3 years. We found reproducible diel oxygen patterns and daily metabolic rates. The charophyte canopy accounted for almost all primary production and respiration of the ecosystem. Two novel discoveries—profound afternoon depression of production and nighttime decline of respiration—occurred on virtually every day. Extensive increase of oxygen-, temperature- and pH-levels and depletion of dissolved inorganic carbon (DIC) and CO₂ concentrations could account for maximum NEP-rates before noon and afternoon depression with low NEP-rates. Ecosystem respiration declined during the night to 24–70% of rates at sunset, probably because of depletion of respiratory substrates. Afternoon depression of photosynthesis should be widespread in numerous habitats with dense growth of macrophytes, periphyton, or phytoplankton implying that daily photosynthesis and growth are restricted and species with efficient DIC use may have an advantage.