The aquatic crustacean Daphnia magna is an important species for ecotoxicological study, and is often used as a test organism for environmental risk assessment. However, the mechanism of xenobiotic metabolism by this species has not been studied in detail. In the present study, pyrene was used as model substance to investigate the mechanism of xenobiotic metabolism in D. magna. The results of 24-h exposure experiments showed that D. magna could metabolize pyrene and biotransform it into water-soluble metabolites. On the other hand, the metabolism of pyrene was significantly inhibited by SKF-525A as the cytochrome P450 (CYP) inhibitor. These observations indicated that oxidation by CYP participated in the biotransformation of pyrene by D. magna. We also identified the pyrene metabolites formed by D. magna by HPLC with an electrospray ionization triple quadrupole mass spectrometry detector (LC/ESIMS/MS) and de-conjugation by sulfatase, beta-glucuronidase, and beta-glucosidase. One of the metabolites was ionized in ESI negative mode and formed a dominant mass of m/z 297 (MS) with the product ion of m/z 217 (MS2). Furthermore, this metabolite formed 1-hydroxypyrene on treatment with sulfatase. This metabolite was considered to be a sulfate conjugate of oxidized pyrene (1-hydroxypyrenesulfate). Furthermore, we quantified the deconjugated 1-hydroxypyrene formed by the above enzyme treatment. It showed that 52% of the total metabolized pyrene was biotransformed into 1-hydroxypyrene-sulfate, and more than 73% was biotransformed into oxidized pyrene conjugate. These results indicated that CYP and several conjugation enzymes participate in its biotransformation, and sulfation is important in D. magna for metabolism and elimination of xenobiotics.