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Species of the diatom genus Pseudo-nitzschia, some of which produce the neurotoxin domoic acid (DA), were studied to see how environmental factors affect their distribution in two tropical monsoonal estuaries and how salinity influences the growth and toxicity of P. pungens. Pseudo-nitzschia pungens, P. multistriata, and P. seriata were present in both the Mandovi and Zuari estuaries, whereas P. australis and P. pseudodelicatissima appeared only in the Zuari estuary. Canonical correspondence analysis indicated a significant positive correlation between salinity and the occurrence of P. seriata in the Mandovi estuary and of P. pungens in the Zuari estuary. A strain of P. pungens isolated from the Zuari estuary showed significant variations in specific growth rate between salinities, in support of our finding of a relationship between salinity and its distribution in the field. The lowest growth rate (0.44 day−1) was at a salinity of 5 and it increased to a maximum (1.05–1.19 day−1) at salinities of 15 to 30, declining slightly (0.98 day−1) at a salinity of 35. The isolated strain produced DA but at low levels. DA production rates varied significantly with salinity; they were low and similar at salinities of 5–15 (2.56–3.12 ng ml−1 day−1) and increased with increasing salinity, reaching 5.25 ng ml−1 day−1 at 35. The observed variations in growth rate and DA production by P. pungens indicate the need to focus more on salinity as an environmental factor that affects this, and other Pseudo-nitzschia species, in these monsoonal waters.