Silkworm (Bombyx mori L.) pupae are a high‐quality feed ingredient, rich in protein and fat. However, silkworm pupae are prone to oxidative rancidity due to the high content of unsaturated fatty acids, which limits its large‐scale use in feed. A 56‐day feeding study was conducted to determine the effects of oxidized silkworm pupae on growth performance, structure and function of the intestine, liver and muscle in genetically improved farmed tilapia (GIFT, Oreochromis niloticus). Three approximately isonitrogenous (crude protein: 328 g kg−1) and isolipidic (crude lipid: 56 g kg−1) diets were formulated containing 4% fresh silkworm pupae, lightly oxidized silkworm pupae and highly oxidized silkworm pupae, which named FSP, LOSP and HOSP respectively. Three groups of GIFT with an initial weight of (44.22 ± 0.54) g were randomly assigned to each diet. The results showed that the weight gain rate (WGR), specific growth rate and feed intake decreased with increasing silkworm pupae oxidative levels (p < 0.05). Villus height in LOSP and HOSP significantly decreased with increasing silkworm pupae oxidative levels (p < 0.05), while villus number and muscular thickness of foregut were similar among three groups (p > 0.05). Dietary oxidized silkworm pupae significantly reduced the activity of intestinal Na+–K+–ATPase compared with FSP group (p < 0.05), whereas that was similar in LOSP and HOSP groups (p > 0.05). The activities of intestinal protease, lipase and pepsin in HOSP group were significantly reduced compared with FSP group (p < 0.05), whereas those were similar in LOSP and FSP groups (p > 0.05). Hepatocytes with swelling and nuclear migration occurred in the liver of LOSP and HOSP groups. Malondialdehyde (MDA) content of LOSP and HOSP groups in liver was significantly higher than that in FSP group (p < 0.05). Muscular histological examinations indicated that muscle fibre atrophy occurred in HOSP group. The content of crude protein and crude ash in muscle of HOSP group was significantly reduced compared with FSP and LOSP groups (p < 0.05). ∑n‐3PUFA contents in the muscle of HOSP decreased by 37.28% compared with FSP group (p < 0.05). To sum up, dietary oxidized silkworm pupae inhibited growth, reduced the gastrointestinal digestive and absorptive capacity and hepatic antioxidant capacity, and the negative impacts were increased with the increasing oxidative degree of silkworm pupae. In addition, highly oxidized silkworm pupae have a destructive effect on the histological structure of the foregut, liver and muscle.