Optimal defense theories suggest that a trade-off between defense costs and benefits maintains genetic variation within plant populations. This study assessed the independent and interactive effects of genetic- and environment-based variation in aspen leaf chemistry on insect performance, preference, and defoliation. Gypsy moth larvae were released into screenhouses containing eight aspen genotypes growing with high and low levels of nutrient availability. Plant chemistry, defoliation, and larval growth rates varied in response to genotype, nutrient availability, and their interaction. Total phenolic glycoside concentrations were inversely correlated with patterns of larval preference and were the best predictor of larval performance and defoliation among genotypes. Low-nutrient trees were less heavily defoliated and afforded decreased larval growth rates compared with high-nutrient trees. Nutrient availability mediated the defense benefits of phenolic glycosides, as plant chemistry explained significantly less variation in defoliation in low- compared with high-nutrient trees (7% vs. 44% of variation explained). These results suggest that spatial and temporal variation in resource availability may influence the relative magnitude of defense benefits in plants. Environmental mediation of the defense costs and benefits likely leads to diversifying selection and may maintain genetic polymorphisms in chemical defense traits in plant populations.