Salinity, waterlogging and a combination of both stresses are severe threats to plant growth, development and yield of field-grown cotton (Gossypium hirsutum L.), but their individual or combined effects on insecticidal efficacy of Bacillus thuringiensis (Bt) transgenic cotton and the underlying mechanisms are not well understood. In the present study, two cotton cultivars (33B and SCRC17) containing the Cry1Ac  insecticidal protein gene were planted in 10 L pots filled with soil and allowed to grow in a greenhouse. The potted plants were either treated with NaCl (5 mg/g, w/w), waterlogging, or a combination of both stresses at the three true-leaf stage, and levels of total soluble protein, Bt insecticidal protein, gossypol and the control efficacy as indicated by mortality of bollworm larvae were examined at 7-day intervals after stress. Waterlogging and a combination of salinity and waterlogging reduced total protein content by 40–46% and 45–65% and Bt protein content by 38–50% and 45–72% from 7 to 21 days after stress, relative to the non-stressed control, respectively. The control efficacy was significantly reduced by either waterlogging or the combined stress. Regression analysis indicated that Bt protein content was correlated to total soluble protein content (R2 = 0.7677*), while Bt cotton efficacy was correlated to Bt protein level (R2 = 0.7917**). Salinity reduced Bt protein by 11–22% and total soluble protein by 5.7–7.2% from 7 to 21 days after NaCl stress, but did not result in reduction in control efficacy. It is concluded that reduced bollworm control efficacy under waterlogging or the combined stress could be mainly attributed to the declined levels of Bt protein, which is closely associated with the inhibited nitrogen metabolism by stresses. As one of the secondary compounds that are toxic to pests, increases in gossypol may be involved in maintaining the efficacy when Bt protein level was reduced under salinity.