We examined the effects of multigenerational exposure of mercury (Hg) on Hg toxicity and biokinetics in a population of Daphnia magna. After chronic Hg exposure at 3.8 μg Hg/L, the first generation (F0) adults had an elevated 24-h median lethal concentration (LC50) of Hg (76 μg/L) when compared to the control adults (56 μg/L). The dissolved influx rate of Hg was depressed significantly in the Hg-treated adults, which was accompanied by a reduced ingestion rate and enhanced induction of metallothionein-like proteins (MTLP). The second-generation (F1) juveniles originating from the control and exposed lines had no major differences in these parameters (except the dietary assimilation efficiency). Recovery from Hg stress enhanced the vulnerability of F1 adults to Hg toxicity, with a reduced 48-h LC50 (44 μg/L) and a decreased concentration of MTLP (80% of control). Nevertheless, Hgtreated F1 adults had similar tolerance (in terms of LC50s) as the control line, indicating that D. magna acclimated to Hg stress after the first generation of exposure. No major difference occurred in the Hg biokinetics and toxicity among different groups of F2 daphnids. However, the F2 neonates produced by the Hg-treated F1 adults had much higher 48-h LC50 (149 μg/L) and MTLP concentration (148% of control) when there was continuous Hg exposure after birth. We concluded that acclimation to Hg stress occurred quickly in D. magna, though animals recovering from Hg stress were more vulnerable to Hg toxicity. Both ingestion rate and MTLP may not be good biomarkers of Hg stress in the field, because acclimation can be achieved through multigenerational exposure to elevated Hg concentrations.