The response of the rice field biofertilizer Azolla microphylla to different concentrations of the insecticide monocrotophos (25 – 400 ppm) was premeditated on 5th day after insecticide exposure with respect to growth and physiology under laboratory conditions. Insecticide exposure resulted in the reduction of relative growth rate and biomass accumulation at all the concentrations. An increase in the doubling time was also noticed which is an indication of delayed growth. Along with inhibition in growth insecticide application also resulted in reduced chl. a, chl. b, total chlorophyll and carotenoid contents of A. microphylla. Reduction in the heterocyst frequency was also observed under similar conditions. Protein content was also reduced on increasing insecticide exposure. The preliminary studies on the effect of the insecticide show adverse effect on the growth and physiology of A. microphylla which is a non-target organism in the rice fields. Azolla seems to help sustain the soil nitrogen supply by returning nitrogen to quantities roughly equal to those extracted from the soil by the rice plant.