The formulator of aquatic diets is part of a continuous search for alternative protein sources instead of depreciated fish meal. The utilization of zooplankton as a feed ingredient is an interesting trend due to their high-quality protein content and abundance of essential nutrients. The current study aims to investigate the effects of partial and total replacement of fish meal (FM) by Dahpnia magna meal (DMM) on growth performance, feed utilization, histological, and economic status of mullet, M. cephalus, larvae. In addition to the control diet, 100% FM, D0, four diets containing DMM at different levels were used: 25% (D25), 50% (D50), 75% (D75), and 100% (D100) replacement of fish meal. A total of 300 larvae (0.097 ± 0.001 g) were equally divided into five groups (three replicate per each group) at a density of 200 larvae m−3. The aquariums were renewed at a rate of 30% daily. During the 60-day experimental period, all larvae were fed their respective diets at a level of 20% of live body weight, five times a day (9.00 a.m., 12.00, 15.00, 18.00, and 21.00 p.m.). The results indicated that compared to D0, fish fed D75 recorded the highest significant value of growth, and feed utilization parameters, while fish fed D100 achieved the lowest feed cost and incidence cost, and the highest profit index and economic efficiency ratio. A strong correlation was reported among weight gain, feed conversion ratio and fish meal replacement with DMM; R2 = 0.94 and 0.91, respectively. The fit regression model representing mullet response to FM replacement with DMM is a poly-nominal regression model with maximum response at 75–100%. The histological investigation of the intestine revealed an improvement of histomorphometric indices and goblet cell number with increasing DMM inclusion levels. These findings confirmed that 75% to 100% partial substitution of FM with DMM is the ideal replacement for mullet, M. cephalus, larvae for improving fish growth performance and feed utilization.