Adaptations and, counteradaptations are common in coevolving predatorprey systems, but little is known of the role of maternal transfer of adaptive traits in mediating species interactions. Here, we focused on tolerance against cyanobacterial toxins and asked whether this tolerance was an induced defense developed during Daphnia's lifetime, whether it was a trait that is constantly expressed, and whether such tolerance to the toxin can be transferred to the next generation through maternal effects. These questions were addressed by feeding a single clone of Daphnia magna a diet with and without algal toxin and recording changes in fitness (as intrinsic rate of population increase). Analysis of F1, F2, and F3 generations revealed that the increased tolerance to toxic Microcystis was an inducible defense developed during an individual's lifetime, and that this trait could be transferred from mother to offspring. This maternal effect was expressed in several fitness parameters, including shorter time to maturity and first reproduction, and higher numbers of offspring compared to inexperienced individuals. In some circumstances, such maternal effects may increase population production by up to 40% and may help to stabilize material and energy transfer to higher trophic levels.