Recent evidence shows that high supply ratios of light and nutrients limit planktonic herbivore growth by lowering the nutritional quality of algae. Over longer time scales, however, grazers may ameliorate this effect by their impact on nutrient cycling. We examine this possibility using two species of the herbivorous zooplankter Daphnia and its algal prey under different light intensities and low phosphorus supply in laboratory microcosms. At high light, Daphnia biomass was limited for a substantial period because of low P content of algal cells. However, a gradual increase in Daphnia density eventually improved food quality through grazing and nutrient cycling and via a novel process involving positive density dependence. Competitive exclusion of one of the two Daphnia species occurred under low light but not under high light when algae were nutritionally unsuitable. Such stoichiometrically mediated interactions among herbivorous animals may represent important mechanisms that affect community structure and material flows in ecosystems.