Organic fertilizer was made from cyanobacteria, macroohytes and sediment salvaged from Chaohu Lake by the high temperature composting and its effects on crop yield, soil physiochemical properties and microbial characteristics were studied through a field experiment. The results showed that this algae-grass-mud organic fertilizer could significantly increased soybean and peanut yields, the values of total nitrogen (TN), alkali solution nitrogen, total phosphorus (TP), Olsen phosphorus, organic matter, humic acid, soil porosity and CEC, significantly reduced soil bulk density. Compared with the treatment of non plant and non fertilization (T1), soil MBC and MBN of fertilization-planting soybean (T4) and fertilization–planting peanut (T5) increased by 116.5%, 97.8%, and 196.7%, 170.6%, respectively; the activities of invertase, urease and catalase in T4 and T5 treatments increased by 183%, 392%, 8.9% and 116%, 268%, 1.01%, respectively. In addition, significant correlation was found among soil MBC, MBN and soil TN, TP, organic matter, humic acid, invertase and urease activities. No significant correlation existed between catalase activity and soil fertility factors in T4 treatmenut, However, significant correlation was found among urease activity, Olsen phosphorus, organic matter, humic acid, soil MBC and MBN in T5 treatment. It is feasible to recycling use cyanobacteria, macroohytes and sediment salvaged in Chaohu Lake in producing organic fertilizer.