Shrimp aquaculture is a major economic activity in Tamil Nadu, with the Nagapattinam and Mayiladuthurai districts together accounting for nearly 45% of the state’s licensed shrimp farms. Although the sector has periodically attracted concern regarding its environmental sustainability particularly with respect to shrimp farm discharge water quality and coastal ecosystem health there remains a paucity of empirical, field-based assessments from this region. The present study evaluated key environmental parameters across twelve shrimp farms and two control sites located in Nagapattinam and Mayiladuthurai districts. Water quality and plankton composition were assessed during the summer and pre-monsoon seasons, with samples collected from intake waters, farm discharge points, discharge-receiving areas, and control sites. Physico-chemical parameters including ammonia, nitrite, nitrate, and chemical oxygen demand (COD) were analysed and compared against regulatory standards prescribed by the Coastal Aquaculture Authority (CAA) and the Tamil Nadu Pollution Control Board (TNPCB). Statistical analyses were conducted using one-way ANOVA and independent t-tests to examine spatial and seasonal variations in water quality (p < 0.05). Results indicated no significant differences in most parameters among the different water types, with only localized increases in COD (p < 0.001) observed values that nonetheless remained well within permissible limits. Plankton analysis revealed diatom dominance and diverse zooplankton assemblages, suggesting ecological stability in the receiving environments. Overall, the findings demonstrate that shrimp farming practices in the study areas are environmentally compliant and exert minimal ecological impact, thereby reinforcing the sector’s sustainability and its continued importance as a source of rural livelihood and economic growth in coastal Tamil Nadu.