The proliferation of cyanobacteria in drinking water sources is problematic for water authorities as they can interfere with water treatment processes. Studies have shown that oxidants such as chlorine can enhance the coagulation of cyanobacteria; however, chlorine can potentially lyse cyanobacterial cells, releasing toxic metabolites. Chlorine also has the potential to effectively degrade these toxins. This study evaluated the effect of chlorine on the cell integrity of toxic Microcystis aeruginosa in reservoir water using flow cytometry. In addition, the effect of chlorine on the subsequent release and degradation of microcystin toxins was systematically assessed. Cell lysis occurred at chlorine exposure values between 7 and 29 mg min/L, which is within the range of normal disinfection practices. Intracellular toxin was shown to be released from damaged cells at a rate three times faster than it was degraded by chlorine. The degradation of extracellular microcystin by chlorine was found to be dependent upon the pH, chlorine exposure, and the presence of cyanobacterial cells.