Some microalgae are able to kill or inhibit nutrient-competing microalgae, a process called allelopathy. Inhibiting or killing competitors enable these species to monopolize limiting resources, such as nitrogen and phosphorus. Prymnesium parvum is known to produce such allelopathic compounds, substances that seem identical to the ichthyotoxins identified from this species. Biotic and abiotic environmental factors influence not only growth rates but also toxin/allelopathic compounds production by P. parvum cells. Toxin production, as well as allelopathy, including grazer deterrence, increases dramatically in light, temperature, or nutrient stressed P. parvum cells. Correspondingly, toxicity and allelopathy may decrease, or cease completely, if cells are grown with high amounts of N and P in balanced proportions. However, even under nutrient (N and P) sufficient conditions, P. parvum is able to produce toxins/allelopathic compounds, with negative effects on other phytoplankton species or grazers, if cells densities of P. parvum are high relative to other species. This negative effect might shift the plankton community to more toxin resistant species. Filtrates from nutrient-deficient P. parvum cultures have almost the same strong negative effect on grazers and other phytoplankton species as when Prymnesium cells are grown together with the target organisms. Eutrophication, the increased input of N and P to aquatic ecosystems, besides increasing nutrient concentrations, is usually provoking unbalanced N:P condition for the optimal growth of phytoplankton, deviating from the Redfield ratio, i.e., the phytoplankton cellular nitrogen to phosphorus ratio, N:P = 16:1 (by atoms) or 7.2:1 (by weight). Eutrophication thus both enhances P. parvum growth and increases production of toxins and allelopathic compounds. Supplying N-deficient or P-deficient P. parvum cells with the deficient nutrient reduces toxicity to less than half within 24 h after additions. As P. parvum is mixotrophic, uptake of dissolved or particulate organic N (DON or PON) can also reduce toxicity and allelopathy in the same manner as addition of inorganic N to N-starved cells. In conclusion, P. parvum, by increasing its toxicity and allelopathic ability under poor environmental conditions, outcompetes the co-occurring phytoplankton species.