Diets must satisfy the everyday metabolic requirements of organisms and can also serve as medicines to combat disease. Currently, the medicinal role of diets is much better understood in terrestrial than in aquatic ecosystems. This is surprising because phytoplankton species synthesize secondary metabolites with known antimicrobial properties. Here, we investigated the medicinal properties of phytoplankton (including toxin-producing cyanobacteria) against parasites of the dominant freshwater herbivore, Daphnia. We fed Daphnia dentifera on green algae and toxic cyanobacteria diets known to vary in their nutritional quality and toxin production, and an additional diet of Microcystis with added pure microcystin-LR. We then exposed Daphnia to fungal and bacterial parasites. Anabaena, Microcystis and Chlorella diets prevented infection of Daphnia by the fungal parasite Metschnikowia, while Nodularia toxins increased offspring production by infected hosts. In contrast to their medicinal effects against Metschnikowia, toxic phytoplankton generally decreased the fitness of Daphnia infected with the bacterial parasite, Pasteuria. We also measured the amount of toxin produced by phytoplankton over time. Concentrations of anatoxin-a produced by Anabaena increased in the presence of Metschnikowia, suggesting parasite-induced toxin production. Our research illustrates that phytoplankton can serve as toxins or medicines for their consumers, depending upon the identity of their parasites.