In his seminal 1961 paper 'The paradox of the plankton' Am Nat 95:137-147, G. E. Hutchinson asked why many species of phytoplankton can coexist while competing for a small number of limiting resources in an unstructured habitat. Hutchinson anticipated the resolution of his paradox, recognizing that communities are organized by processes beyond resource competition including species interactions, habitat variability and dispersal. Since 1961 we have made fundamental discoveries that have revolutionized our conceptual understanding of pelagic ecology, including (1) habitat heterogeneity at all scales relevant to plankton population dynamics, (2) community shifts in response to global climate cycles, (3) fast and selective predation as a powerful top-down force to shape phytoplankton communities, (4) turbulent mixing as a physical process that selects species on the basis of their size and form, (5) mixotrophy that allows some algal species to tap organic nutrient pools and function at multiple trophic levels, (6) taxon-specific life cycles including alternating vegetative and resting stages, and (7) the pelagic as an open system where communities are continually reshaped by species immigration. Here we synthesize these discoveries to show how they validate and amplify Hutchinson's hypothesis that phytoplankton communities are assembled by many processes. Our synthesis is built around observations of phytoplankton species composition from a decade of study in San Francisco Bay, used as a case study to illustrate the contemporary principles of phytoplankton community ecology. We apply these principles to address 2 central questions: (1) What processes assemble phytoplankton communities? (2) How does phytoplankton community composition influence ecosystem functions such as production in pelagic and benthic food webs?