A 10‐week feeding trial of using housefly (Musca domestica) maggot meal (MM) in practical feeds for Nile tilapia (Oreochromis niloticus) was conducted to assess the growth performance, ingredient utilization, flesh quality, innate immunity and its influence on water environment. Fish were fed five isonitrogenous and isoenergetic diets, where fishmeal (FM) was substituted by MM at the level of 0, 90, 180, 270 and 360 g kg‐1 diet (remaining FM content: 360, 270, 180, 90 and 0 g kg‐1). There was no significant difference in feed intake and apparent digestibility coefficient between the treatments. Replacing up to 270 g kg‐1 FM did not have an impact on the growth performance and ingredient utilization, whereas the complete replacement of FM caused significantly lower survival rate, weight gain, specific growth rate and higher feed conversion rate. Dietary MM was also proved positively influential in flesh quality, whereas replacing 180 g kg‐1 or more FM suppressed the innate immunity of tilapia. When compared by the effects on the water environment, the increasing substitute levels were accompanied with the declining concentrations of nitrite nitrogen and total phosphorus in the water. Our study verified the feasibility of using MM as a partial substitute of FM in aquatic feed. When replacing 180 g kg‐1 FM (corresponding to half of the FM content in control diet) in the diet of Nile tilapia, it can serve as a renewable and environmentally superior alternative without compromising the performance criteria.