A novel on-line digestion method was developed based on organic mercury (Org-Hg) oxidation at ambient temperature using potassium permanganate in the presence of sulphide. The digestion of Org-Hg was instantaneous and quantitative. Consequently, a simple mercury speciation method was developed to differentiate inorganic mercury (In-Hg) and Org-Hg in water samples with a sequential injection analytical system in conjunction with atomic fluorescence spectrometric detection by using Hg2+ as the sole standard for calibration. In-Hg was determined after acidification and decomposition of the organic matter in the sample matrix with KMnO4, while total mercury (T-Hg) was determined after online Org-Hg digestion, and Org-Hg was calculated as the difference between T-Hg and In-Hg. The operational parameters were optimized and the possible role that sulphide played in the digestion of Org-Hg was discussed. A detection limit (3σ criterion) of 3 ng L−1 Hg was achieved, which is far below the guideline value of Hg in drinking water set by WHO, viz., 1 μg L−1. The method was applied to the analysis of lake water samples for the determination of In-Hg and Org-Hg. Relative recoveries of 94-97% for In-Hg and 93.5-94.5% for T-Hg with relative standard deviations of 1.1-3.1% were obtained in real samples spiked with 100 ng L−1 Hg2+ and 100 ng L−1 Org-Hg, respectively, indicating the feasibility of the automatic method for the determination of Hg species at the low ng L−1 level.