In biofilms, the competition between microorganisms for light, nutrients and space is extreme. Moreover, planktonic algae can be considered as competitors insofar as they decrease the available light for the benthic algae. One of the strategies employed by microorganisms to eliminate competitors is the release of inhibiting compounds, a process known as allelopathy. Here we demonstrate that a benthic/epiphytic alga, Uronema confervicolum, produces allelopathic compounds that induce oxidative stress and growth inhibition in the planktonic Desmodesmus quadrispina. Some of these compounds can also trigger the formation of colony in D. quadrispina. As colonies have higher sedimentation rates than unicells, their induction by U. confervicolum might decrease shading. This study is the first report of colony induction in the context of alga–alga interaction. Our results also suggest the implication of mitogen-activated protein (MAP) kinases in the transduction of the signal leading to the formation of reactive oxygen species in the cells. A comparison with allelochemicals from another planktonic green alga, Monoraphidium aff. dybowski, emphasizes the specificity of colony induction by U. confervicolum, in contrast with oxidative stress which is induced by several compounds. The reciprocal production of inhibiting compounds by D. quadrispina makes this interaction an interesting example of co-evolution between two microorganisms belonging to different compartments of the ecosystem.