Inducible defences in phytoplankton are often assumed to come at a cost to the organism, but trade-offs have proven hard to establish experimentally. A reason for this may be that some trade-off costs only become evident under resource-limiting conditions. To explore the effect of nutrient limitation on trade-offs in toxin-producing dinoflagellates, we induced toxin production in Alexandrium minutum by chemical cues from copepods under different levels of nitrogen limitation. The effects were both nitrogen- and grazer-concentration dependent. Induced cells had higher cellular toxin content and a larger fraction of the cells was rejected by a copepod, demonstrating the clear benefits of toxin production. Induced cells also had a higher carbon and nitrogen content, despite up to 25% reduction in cell size. Unexpectedly, induced cells seemed to grow faster than controls, likely owing to a higher specific nutrient affinity due to reduced size. We thus found no clear trade-offs, rather the opposite. However, indirect ecological costs that do not manifest under laboratory conditions may be important. Inducing appropriate defence traits in response to threat-specific warning signals may also prevent larger cumulative costs from expressing several defensive traits simultaneously.