Freshwater dinoflagellates may form dense blooms during winter in ice-covered lakes. Unlike their marine counterparts, freshwater dinoflagellates are rarely considered to be potential toxin producers. Here we tested whether the winter species Peridinium aciculiferum produces a toxin(s) and investigated the potential adaptive function of that toxin, i.e., predator defense or inhibition of competitors (allelopathy). Using traditional toxicity bioassays (Artemia toxicity test and hemolytic activity assay). we detected the production of a toxic substance by P. aciculiferum cells from both the field and from laboratory cultures. Cultures deprived of phosphorus and in stationary phase showed highest toxicity. Potential predators, such as Daphnia galeata (Cladocera) and Eudiaptomus graciloides (Copepoda), were apparently not harmed by P. aciculiferum toxicity. However, the naturally coaccurring competitor Rhodomonas lacustris (Cryptophyceae) was killed by P. aciculiferum. An allelopathic substance(s) caused the cells of R. lacustris to form blisters and subsequently lyse. We concluded that our results support the hypothesis that P. aciculiferum is allelopathic, but not that toxins serve as predator defense. We therefore suggest that allelopathy may be an adaptive strategy of winter dinoflagellates, which could allow them to outcompete other phytoplankton species and thereby dominate the algal biomass.