Toxicity of the pyrethroid insecticide permethrin was assessed using three life stages of the estuarine grass shrimp, Palaemonetes pugio. Adult and larval shrimp were tested with and without sediment. An aqueous embryo test was also conducted. Cellular stress biomarkers, glutathione, and lipid peroxidation, were assessed. Larval shrimp were the most sensitive life stage with a 96-h lethal concentration (LC(50)) value of 0.05 microg/L, compared to 0.25 microg/L for adults, and 6.4 microg/L for embryos. The presence of sediment significantly decreased toxicity of permethrin to both adult and larval shrimp. Permethrin exposure increased time to hatch in embryos and decreased swimming behavior of larvae. Lipid peroxidation levels were significantly decreased in the adult shrimp, but increased in larval shrimp exposed to permethrin. Low levels of permethrin may negatively affect grass shrimp health and survival. Permethrin use in the coastal zone should be carefully managed to avoid adverse impacts on nontarget estuarine organisms.