Dynamic variations of suspended sediment (TSM) in extremely turbid waters of Hangzhou Bay (HZB) have been studied using a tower-based high-frequency water-spectrum observing system. We developed a practical data processing method for the high-frequency water-spectrum observation. In addition, the method was validated by the ASD measurement, and the results showed that the tower-measured normalized water-leaving radiance was consistent with it measured by ASD, with the correlation coefficient greater than 0.90 and the mean relative error of 6.48%. Based on the tower-measured water spectrum, the TSM was retrieved further with high frequency, and the results showed that the TSM in the HZB had significant diurnal and seasonal variations. The diurnal dynamics might mainly be caused by tidal induced resuspension, yet the seasonal variations might be derived by winds largely.