Growing nanomaterials based consumer applications have raised concerns about their potential release into the aquatic ecosystems and the consequent toxicological impacts. So environmental monitoring of the nanomaterials in aqueous systems becomes imperative. The current study reveals the potential of Ceriodaphnia dubia (C. dubia) as a bio-indicator for aluminum oxide nanoparticles in a fresh water aquatic ecosystem where it occupies an important ecological niche as a primary consumer. This study aims to investigate the aluminium oxide nanoparticle induced acute toxicity on Ceriodaphnia dubia in a freshwater system. The bioavailability of the aluminum oxide nanoparticles has been studied with respect to their aggregation behavior in the system and correlated with the toxicity endpoints. The oxidative stress generated by the particles contributed greatly toward their toxicity. The crucial role of leached aluminium ion mediated toxicity in the later phases (48 h and 72 h) in conjunction with the effects from the nano-sized particles in the initial phases (24 h) puts forth the dynamics of nanotoxicity in the test system. The internalization of nanoparticles (both gross and systemic uptake) as substantiated through the transmission electron microscopy (TEM) and inductively coupled plasma optical emission spectral (ICP-OES) analysis was another major contributor toward acute toxicity. Concluding the present study, Ceriodaphnia dubia can be a promising candidate for bio-monitoring the aluminium oxide nanoparticles in a fresh water system. © 2013 Pakrashi et al.