This work presents the degradation of neonicotinic pesticide imidacloprid by an isolated bacterium Klebsiella pneumoniae strain BCH1. The bacterium was capable of degrading imidacloprid up to 78% within 7 days at 30 °C under static conditions. Effect of various physico-chemical parameters like pH, temperature and increasing pesticide concentration on biodegradation rate were tested. Biodegradation was monitored by various analytical techniques like TLC, HPLC, GC–MS and FTIR. The metabolites produced after imidacloprid degradation were characterized and identified as nitrosoguanidine, imidacloprid guanidine and 6-chloronicotinic acid by gas chromatography and mass spectroscopy. Toxicity testing of imidacloprid and its degraded metabolites was performed using silkworm (Bombyx mori) as a model animal. Various biochemical parameters viz. antioxidant enzyme status (catalase and superoxide dismutase), lipid peroxidation, protein oxidation and genotoxicity assay were performed to assess the toxicity of imidacloprid and its biodegradation metabolites.