Grass shrimp (Palaemonetes pugio) embryos were used to determine the effects of estuarine sediment on the toxicity and persistence of diflubenzuron (DFB) in two laboratory microcosm systems. The experimental microcosms contained DFB in seawater with sediment and DFB in seawater without sediment while the control microcosms contained seawater with sediment and seawater without sediment. Concentrations of DFB in seawater were determined by high performance liquid chromatography (HPLC) analysis of water samples collected from the DFB-treated microcosms. The estimated half-life of DFB in seawater was 18.7d in the microcosm without sediment compared to 5.2d in the system with sediment. The toxicity of aged DFB from the microcosms (initial nominal concentration = 10 μg/L) was determined by exposing 5-day old embryos of Palaemonetes pugio to 1 L of seawater (withdrawn from the microcosms) for 4d in a static system. Delayed toxicity was monitored at the larval stage. Toxicity end-points studied were: hatchability of the eggs, morphological abnormality of the larvae and larval viability. The results indicate that the presence of organic sediment in the DFB-treated microcosm significantly reduced the efficacy of DFB in seawater. The initial 10 μg/L DFB in the DFB-sediment microcosm aged for 30d before delayed toxicity was reduced to a non-significant level. By day 30, embryos reared in seawater from DFB-sediment microcosm produced larvae with no significant morphological abnormality and larval viability was comparable to the controls. Embryos reared in seawater from DFB-seawater microcosm (devoid of sediment) produced larvae with severe abnormalities and very low viability even after the solution aged for 65d. Hatchability of the eggs was not significantly affected by seawater from either of the DFB-treated microcosms.