The state is warning people to keep dogs and children away from Lake Carmi in Franklin because of blue-green algae.
A water sample taken from the lake more than a week ago was found to contain the toxic algae.
Some varieties of blue-green algae produce dangerous toxins that can be harmful if swallowed. Skin contact can cause rash or irritation.
Children and dogs are especially vulnerable because they are more likely to drink the water.
No human illnesses have been reported after coming into contact with the algae, but at least two dogs died during the summer of 1999 and 2000 after drinking large amounts of water near in an algae bloom in Lake Champlain.