Despite their relevance for risk assessment, the interactive effects of pesticide and predation cues are poorly understood because the underlying behavioral and physiological mechanisms are largely unknown. To explore these mechanisms, we reared larvae of the damselfly Coenagrion puella at three different predation risk levels and a range of environmentally realistic concentrations of three pesticides used worldwide (atrazine, carbaryl, and endosulfan). We compared key development responses (growth rate, developmental time, and final size) against food ingestion, assimilation, and conversion efficiency, and acetylcholinesterase (AChE) activity. Predation risk impaired all endpoints, including AChE activity, while the effects of pesticide stress were smaller for atrazine and endosulfan and absent for carbaryl. The effects of both stressors and their interaction on life history were mostly indirect through resource acquisition and energy allocation. Compensatory physiological mechanisms to pesticide stress (atrazine and endosulfan) were present in larvae reared in the absence of predation stress but were offset under predation stress. As a result, smaller size (atrazine and endosulfan) and lower growth rate (endosulfan) from pesticide stress were only found in the highest predation risk treatment. Our results provide insight as to the conditions under which interactions between stressors are likely to occur: damselfly populations at high density and living in fish ponds will be more affected by pesticides than populations at low densities in fishless ponds. By identifying variables that may shape the interaction between predation stress and other stressors such as pesticides, our mechanistic approach may help to bridge the gap between laboratory and field studies.