Abstract: Blooms of blue-green algae in eutrophication lake has been one of the major environmental problems in recent years. Bioconversion of blue-green algae to biopesticide by Bacillus thuringiensis GIM1.32 was studied using the mud of blue-green algae in Dianchi lake of Yunnan province as culture medium. During fermentation, the available cells and spores, as well as the morphology and metabolic characteristics of B.thuringiensis GIM1.32 were measured. Furthermore, the production of insecticidal crystal protein and its toxicity titer of B.thuringiensis GIM1.32 in the mud of blue-green algae were also investigated, comparing with that in the conventional LB culture medium. The results showed that the mud of blue-green algae was a suitable medium for B.thuringiensis GIM1.32, in which the growth, spore formation and spore crystal synthesis of B.thuringiensis GIM1.32 were normal. When the mud of blue-green algae (3% solid content and pH of 7) was sterilized and inoculated with pre-cultured (10 h) B.thuringiensis GIM1.32, with inoculation level as 2%, and cultured at 30 ℃, the available B.thuringiensis GIM1.32 reached 6.79×108 CFU/mL and kept relatively stable after 48 h, moreover, the number of spores reached a relatively stable value around 7.01×108 CFU/mL after 54 h. The concentration of 130 ku crystal protein was 4.81 mg/mL, the LC50 value to Plutella xylostella was 0.180 μL/mL, and the toxic titer was 1 600.00 IU/μL. Which were superior to those in the ordinary LB culture medium. The results of present study suggested that blue-green algae has good potential application prospect as medium to produce biopesticide in the future.