Abstract An artificial sediment was tested for use in evaluating the potential hazard of toxicants on benthic organisms. The seawater-sediment system was assessed by use of the pyrethroid insecticide, fenvalerate, as the model toxicant for testing with larvae of the grass shrimp, Palaemonetes pugio, an ecologically important estuarine species. The sediment was prepared from commercially available components, and mixed with the toxicant to provide concentrations of 1, 10 and 100 μg fenvalerate kg −1 dry sediment in 20 ppt seawater. Sediment free of the insecticide served as the control. Throughout the study, fenvalerate was not detected in the water column, but was measured in sediment at the nominal concentration of 100 μg kg −1. The P. pugio population was adversely affected by fenvalerate. The effect occurred at metamorphosis, when larvae changed from pelagic individuals to benthic organisms. At this period, larvae were in direct contact with sediment. A portion of the population was tolerant of the insecticide.