In freshwater environments, one of the challenges aquatic grazers face are periods of suboptimal food quantity and quality. In a life table experiment, the effect of food quantity (a gradient of algae concentration) and quality (a diet of cyanobacteria) on the life history and resource allocation strategy in Daphnia magna was tested. Growth-related traits were similarly affected by both low food quantity and quality, and the reproductive strategies differed. The per-clutch investment (clutch volume) did not differ between Daphnia fed with cyanobacteria and underfed mothers, but resources were differently allocated; underfed mothers increased their per-offspring investment by producing fewer, but larger eggs, whereas cyanobacteria-fed mothers invested in a greater number of eggs of smaller size. I argue that both strategies of resource allocation (number vs. size of eggs) may be adaptive under the given food regime. The cyanobacteria diet-driven fitness losses are comparable to losses caused by low food quantity.