A fungal isolate Aspergillus terreus PDB-B (accession number: MT774567.1), which could tolerate up to 500 mg/L of cypermethrin, was isolated from the lake sediments of Kulamangalam tropical lake, Madurai, and identified by internal transcribed spacer (ITS) sequencing followed by phylogenetic analysis. The biotransformation potential of the strain was compared with five other strains (A, J, UN2, M1 and SM108) as a consortium, which were tentatively identified as Aspergillus glaucus, Aspergillus niger, Aspergillus flavus, Aspergillus terreus, and Aspergillus flavus, respectively. Batch culture and soil microcosm studies were conducted to explore biotransformation using plate-based enzymatic screening and GC-MS. A mycotransformation pathway was predicted based on a comparative analysis of the transformation products (TPs) obtained. The cytotoxicity assay revealed that the presence of (3-methylphenyl) methanol and isopropyl ether could be relevant to the high rate of lethality.