Transgenic plants producing insecticidal proteins from Bacillus thuringiensis (Bt) can control some major insect pests and reduce reliance on sprayed insecticides. However, large scale adoption of this technology has raised concerns about potential negative effects, including evolution of pest resistance to Bt toxins, transgene flow from Bt crops to other plants, and harm to non-target beneficial organisms. Furthermore, concern has also been expressed over the effects this technology may have on biodiversity in general. Ecologically relevant risk assessment is therefore required (Risk = Hazard × Exposure). Transgenic plants that produce Bt toxins to kill insect pests could harm beneficial predators. This might occur directly by transmission of toxin via prey, or indirectly by toxin-induced reduction in prey quality (Hazard). To test these hypotheses, we determined the effects of Bt-producing canola on a predatory ground beetle (Pterostichus madidus) fed larvae of diamondback moth (Plutella xylostella) that were either susceptible or resistant to the Bt toxin. Survival, weight gain, and adult reproductive fitness did not differ between beetles fed prey reared on Bt-producing plants and those fed prey from control plants. Furthermore, while Bt-resistant prey was shown to deliver high levels of toxin to the beetle when they were consumed, no significant impact upon the beetle was observed. Subsequent investigation showed that in choice tests (Exposure), starved and partially satiated female beetles avoided Bt-fed susceptible prey, but not Bt-fed resistant prey. However, in the rare cases when starved females initially selected Bt-fed susceptible prey, they rapidly rejected them after beginning to feed. This prey type was shown to provide sufficient nutrition to support reproduction in the bioassay suggesting that Bt-fed susceptible prey is acceptable in the absence of alternative prey, however adults possess a discrimination ability based on prey quality. These results suggest that the direct effects of Bt-producing canola on predator life history was minimal, and that predators’ behavioural preferences may mitigate negative indirect effects of reduced quality of prey caused by consumption of Bt-producing plants. The results presented here therefore suggest that cultivation of Bt canola may lead to conservation of non-target predatory and scavenging organisms beneficial in pest control, such as carabids, and may therefore provide more sustainable agricultural systems than current practices. In addition, minimal impacts on beneficial carabids in agro-ecosystems suggest that Bt canola crops are likely to be compatible with integrated pest management (IPM) systems.