All prey face a fundamental trade-off between avoiding predation and pursuing activities, such as foraging and mating, that enhance fitness. Therefore, the effects of predation can be both consumptive and nonconsumptive and prey need to assess and respond appropriately to predation risk which in turn varies with environmental and social contexts. We tested the effects of predator density and diel cycle on the consumption, interspecific interactions and behavioural responses of a prey species, the native Australian glass shrimp, Paratya australiensis, exposed to a predator, the invasive eastern mosquito fish, Gambusia holbrooki. In the laboratory, P. australiensis were exposed to low or high densities of conspecifics or predators and observed during the day and at night. While P. australiensis experienced more interspecific approaches and nips when exposed to a high density of G. holbrooki and during the day, neither predator density nor diel cycle influenced the actual number of P. australiensis consumed. Similarly, while P. australiensis engaged in significantly more shelter use and swam less, there was no difference in these behaviours in relation to predator density and diel cycle. Foraging by P. australiensis was not related to species composition, but instead depended on the overall number of animals present with more P. australiensis foraging when exposed to a high density of conspecifics and G. holbrooki. These results indicate that the mechanisms by which G. holbrooki exerts negative effects on P. australiensis can be multiple and wide ranging, from direct predation to a reduction in activity and competition for resources. However, as neither predator density nor diurnal variation altered predation rate, P. australiensis did behave in an adaptive manner, by only adjusting its behavioural responses in proportion to the direct risk of predation.