We present for the first time the nonlinear dynamics of quantum electrodynamic (QED) photon splitting in a strongly magnetized electron-positron (pair) plasma. By using a QED corrected Maxwell equation, we derive a set of equations that exhibit nonlinear couplings between electromagnetic (EM) waves due to nonlinear plasma currents and QED polarization and magnetization effects. Numerical analyses of our coupled nonlinear EM wave equations reveal the possibility of a more efficient decay channel, as well as new features of energy exchange among the three EM modes that are nonlinearly interacting in magnetized pair plasmas. Possible applications of our investigation to astrophysical settings, such as magnetars, are pointed out.PACS numbers: 52.35. Mw, 94.20.wf Recently, there has been a great deal of interest [1] in the investigation of effects associated with radiation pressure and quantum vacuum fluctuations in nonlinear media. Such studies are of importance in astrophysical environments, where copious amounts of electron-positron pairs exist due to numerous physical processes [1]. Elastic photon-photon scattering is traditionally described within quantum electrodynamic (QED) [1,2]. However, observable effects of elastic photon-photon scattering among real photons have so far not been reported in the laboratory [1,3]. For astrophysical systems [4, 5] the situation is different, since the large magnetic field strength in pulsar and magnetar [6] environments changes the diamagnetic properties of vacuum significantly [7], and leads to phenomena such as frequency down-shifting [5]. The latter is a result of photon splitting [8,9], and the process may be responsible for the radio silence of magnetars [5,10]. Moreover, the propagation of electromagnetic waves in a relativistically dense electron gas [11] and in a relativistic electron-positron gas [12] have been discussed, leading to the important effect of gamma photon capture and pair plasma suppression around pulsars [13].In this Letter, we present the nonlinear photon splitting of electromagnetic (EM) waves propagating perpendicularly to a strong external magnetic field B 0 in a pair plasma. Due to the QED effect [1], a photon in vacuum can decay into a backscattered and a forward scattered photon, where the latter two photons have polarizations perpendicular to that of the original photon [8,9]. Noting that significant pair-production [14] occurs in astrophysical settings (viz. in pulsar and magnetar environments), we demonstrate here a novel possibility of a nonlinear decay interaction, due to a competition between QED and plasma nonlinearities. We note that most of previous investigations [15,16], including both QED and plasma effects, have been limited to linear EM wave propagation. Here we derive three dynamical equations with nonlinear couplings between photons with different polarizations. From these coupled mode equations, the QED cross-section for photon-splitting [8] can be deduced in the limit of zero plasma density. We discuss applications of our re...