Pesticides play a critical role in maximizing yields of economically important crops and minimizing the human health threats of disease-carrying pests, but they often have collateral effects on nontarget species. We used a mesocosm study to address how the most commonly used insecticide in the USA, malathion, applied at low, ecologically relevant concentrations (20 and 110 µg/L) affects species interactions in aquatic communities. Unlike many community ecotoxicology studies, our study assessed how malathion affects both consumptive and nonconsumptive effects of predators. We also considered how the vertical distribution of predator cues and malathion (caused by potential stratification) affects species interactions. We found no evidence for vertical stratification of malathion, a result suggesting that exposure to the pesticide was uniform throughout the water column. Malathion was lethal to some primary consumers (cladocerans) at both concentrations and to top predators (dragonflies) at the highest concentration (110 µg/L). These lethal effects initiated density-mediated indirect effects in both cases. Malathion also may have decreased dragonfly foraging efficiency, resulting in increased tadpole survival (trait-mediated indirect effect), which decreased the resources used by tadpoles (periphyton). Collectively, our results show that malathion alters species interactions. However, we suggest that the degree to which pesticides affect aquatic communities will depend strongly on the species composition of communities. Therefore, the community-level consequences of pesticide exposure are likely to vary across the ecological landscape.