Cotton produces insecticidal terpenoids that are induced by tissue-feeding herbivores. Damage by Heliothis virescens caterpillars increases the terpenoid content, which reduces the abundance of aphids. This effect is not evident in Bt-transgenic cotton, which is resistant to H. virescens. We determined whether induction of terpenoids by caterpillars influences the host quality of Aphis gossypii for the parasitoid Lysiphlebus testaceipes and whether this interaction is influenced by Bt cotton. The exposure of parasitoids to terpenoids was determined by quantifying terpenoids in the aphids. We detected several terpenoids in aphids and found a positive relationship between their concentrations in plants and aphids. When L. testaceipes was allowed to parasitize aphids on Bt and non-Bt cotton that was infested or uninfested with H. virescens, fewer parasitoid mummies were found on infested non-Bt than on Bt cotton. Important parasitoid life-table parameters, however, were not influenced by induced resistance following H. virescens infestation, or the Bt trait. Our study provides an example of a tritrophic indirect interaction web, where organisms are indirectly linked through changes in plant metabolites.