The Daphnia galeata population in Lake Biwa (Japan) had almost ceased producing resting eggs by the 1980s. To examine whether D. galeata had lost the ability to produce resting eggs, or if chemical contamination was inhibiting resting egg production, individuals collected in fall (November) and late winter (March), were reared in the laboratory. More than 50% of these D. galeata individuals produced resting eggs irrespective of the month of collection, when reared with food supplied at a level lower than that available during the maternal generation. The results reflect that D. galeata in Lake Biwa have a high ability to produce resting eggs when appropriate stimuli are provided. As chemical substances, such as endocrine disrupters, are known to inhibit resting egg production in Daphnia and these accumulate in lake sediments, we tested whether Daphnia individuals produce resting eggs when reared in sediment-conditioned lake water. In sediment-conditioned lake water, only a few Daphnia that were collected in March produced resting eggs, while 50% of the individuals collected in November produced resting eggs. Thus, D. galeata collected from Lake Biwa are able to produce resting eggs, but genetic variation likely leads to variation in resting egg production in the presence of chemical contaminants. These results suggest that the recent decrease in the resting egg production of Daphnia populations in Lake Biwa is mainly due to a decrease in the strength of the environmental queue that stimulates resting egg production rather than a genetic shift to strains that have a lower ability to produce resting eggs; yet, we cannot rule out the possibility that a chemical contamination plays a role in the decrease of resting egg production.