The ichthyotoxic dinoflagellate <em>Cochlodinium polykrikoides</em> poses a significant threat to the Korean finfish aquaculture industry, thus calling for effective mitigation strategies. We here report for the first time on investigations to assess the efficacy of routine application of clay to a naturally occurring <em>Cochlodinium polykrikoides</em> bloom off Namhae Island in South Korea during August-September 2015. Applications of conventional Korean loess reduced <em>Cochlodinium</em> cell concentrations from a maximum of 4600 mL<sup>−1</sup> to levels considered safe for aquaculture operations (<1000 cells mL<sup>−1</sup>). However, at the same time, two clay application episodes increased ichthyotoxicity in water samples (measured by the gill cell line RTgill-W1 assay) by up to 32% compared to non-treated areas. Simulated laboratory culture experiments identified clay mediated <em>Cochlodinium</em> cell lysis as the probable cause. Lysed cells maintained cytotoxicity for up to 48 h (gill cell viability reduced to 39 ± 7% after 2.5 h exposure), but application of a finely-milled Korean loess completely eliminated ichthyotoxicity. Our results suggest that the fish-killing mechanism of <em>Cochlodinium</em> is comprised of both a stable (up to 48 h) and a transient fraction (decay within minutes). The latter indicates potential involvement of reactive oxygen species (ROS). We offer recommendations to fine-tune existing clay application regimes in Korean waters by focusing not on <em>Cochlodinium</em> cell removal, but on the adsorptive properties of clays to eliminate ichthyotoxicity.