TOLEDO, Ohio—A wave of relief washed over this city Monday after its mayor rescinded a two-day-old restriction on a drinking-water supply serving 500,000 people.

But the good news for residents could be clouded by the forecast from some scientists who suspect the responsible toxin in the drinking water came from a large, soupy-green algal bloom on Lake Erie near the city. The bloom may not peak until September, and in-lake conditions are likely to worsen over the next month, according to Don Scavia, aquatic ecologist and director of the University of Michigan's Graham Sustainability Institute, who helped issue the forecast of a harmful algal bloom for the lake last month.

Experts also said a large bloom doesn't necessarily lead to high levels of the toxins in the water used for drinking. Much depends on the quality of the water at the intake point, often deep below the surface where the algae bloom usually resides.

Still, D. Michael Collins, the mayor of Toledo, raised a glass of city tap water and drank it outside the county emergency-management center Monday morning as a sign to the city and its suburbs that the water was now safe to drink. He added that the city had already employed new water-treatment measures, including adding chlorine and carbon, to try to reduce the toxin. "Here's to you, Toledo," Mr. Collins said. "You did a great job."

The crisis started when chemists testing water at the treatment plant found two sample readings for a toxin known as microcystin, typically connected to an algal bloom in Lake Erie, that exceeded standards for drinking water, according to city officials. The Collins Park plant produces potable water for 500,000 people in the Toledo metropolitan area from the lake.