The replacement of native forests by exotic tree monocultures, such as those of Eucalyptus, decreases the quality of leaf litter inputs to streams and often reduces riparian cover, which can elevate water temperature. The combined effects of these stressors on the survival and performance of detritivores may be important, as detritivore species loss leads to reduced litter breakdown, a key ecosystem process. Potential loss of cased caddisfly larvae is of particular concern because they are the predominant detritivores in many streams, they are sensitive to warming, and they expend energy on building and carrying their cases, which may be an added burden under times of stress. In a microcosm experiment, we tested whether (i) poor-quality Eucalyptus globulus litter impaired case construction by larvae of Sericostoma pyrenaicum (due to preferential allocation of the scarcer available energy to larval fitness) compared to high-quality Alnus glutinosa litter; (ii) whether this effect was enhanced by higher temperatures (15 vs. 10 degrees C) resulting in faster metabolism and greater energy expenditure; but (iii) reduced in the presence of chemical cues from a predatory fish (due to greater investment in more protective cases). We found that Eucalyptus had lethal and sublethal effects on larval caddisflies, increasing mortality, reducing growth, and impairing case construction, compared to larvae fed Alnus. Temperature did not reinforce the effects of exotic litter on case construction, but predator chemical cues triggered the construction of more protective cases (i.e., longer and better cemented) despite the lower resource quality, providing evidence for environmentally mediated resource-allocation tradeoffs.