Polychaete community structure and its spatial distribution was investigated in 2008 from inshore and offshore of Lake Shihwa, Korea, in order to evaluate status of the benthic environment according to construction of the dike and the water gate. In the present study, the number of species, density, and diversity of polychaete community in inshore was significantly different from those in offshore. The density of polychaete community in offshore increased with the number of species whereas the diversity in inshore increased with the number of species. Dominant species in offshore were 13 species, higher than 1% of the total polychaete individuals. Heteromastus filiformis, known as the most dominant species before the construction of the dike, was the most dominant species in offshore, which collectively account for 54% of the total polychaete individuals. In inshore, the seven species were dominant, higher than 1% of the total individuals. Lumbrineris longifolia, Polydora sp., Capitella capitata, Pseudopolydora paucibranchiata, known as pollution tolerant species, contributed to higher than 75% of the total individuals in inshore. Multivariate statistical analyses, non-metric multidimensional scaling, showed apparent difference in polychaete community structure between inshore and offshore, and also difference between inner sites and outer sites of inshore around the water gate. Sediment characteristics (total organic carbon and nitrogen, ignition loss, and acid volatile sulfide) measured in this study also supported to this result. Therefore, this indicates that the offshore provides better benthic environments for polychaete habitation than the inshore, and the inshore around the water gate shows improving benthic environment, compared to the inner inshore.