Transformation products of pharmaceuticals formed by human metabolism within sewage treatment plant or receiving waters are predicted, in most cases, to be less toxic than the parent compound to common aquatic species. However, there is little available data to demonstrate whether this is generally the case. In the present study, a framework was developed to guide testing of transformation products using phototransformation of the β-blocker propranolol to test the hypothesis for this particular transformation route. Phototransformation is an important depletion mechanism of some pharmaceuticals in surface waters with fast reaction rate constants at environmentally relevant conditions. Samples of propranolol in deionized water (DIW) and river water (RW) were exposed to a solar simulator (λ: 295–800 nm) and comparative toxicity of propranolol and its degraded mixtures measured using algal (Pseudokirchneriella subcapitata) and rotifer (Brachionus calyciflorus) screening tests. Results suggested a reduction of toxicity in photodegraded mixtures compared to the parent active pharmaceutical ingredient in all samples tested. Chemical analysis of effect test solutions supported the hypothesis that propranolol was transformed into compounds that appear to be less toxic to the organisms tested under the study conditions. Although the reactions were much faster in RW than in DIW, profiles of transformation products were similar in both matrices at two starting concentrations (1 and 10 mg/L). Results for propranolol implied that the reduction of toxicity using algal and rotifer screening tests was probably due to the production of more hydrophilic and more polar transformation products. Such results will provide useful insights into the environmental risk assessment of pharmaceuticals by taking into account their transformation products.