Pathogen infection and conspecific density may considerably affect key life-history traits of organisms. For naturally aggregating species, even low concentrations of pathogens or high larval densities may have detrimental effects. However, the detailed influence of these factors, particularly their interaction effect, is often overlooked in ecological and life-history studies. To investigate the effects of conspecific density and pathogen infection on life-history traits, we explored the influence of larval density (1 and 5 larvae cm−2, i.e., low and high density, respectively) on phenoloxidase (PO) activity, body mass, and development time of Hermetia illucens L. (Diptera: Stratiomyidae) larvae in the presence of two strains of the entomopathogenic fungus (EPF) Beauveria bassiana (Bals.-Criv.) Vuill. We observed higher PO activity in EPF-treated larvae than in the untreated control and a pronounced difference in PO activity between the two EPF-strain treatments. Larvae reared at high density and treated with EPF showed higher PO activity than untreated larvae at low density. The EPF-treated larvae and larvae reared at high density had longer larval periods than untreated larvae and larvae reared at low density, respectively. Larvae reared at high density also achieved reduced prepupal and pupal masses compared to conspecifics at low density. Interestingly, untreated larvae only achieved higher prepupal and pupal masses at low density, whereas at high density, the pattern was reversed (treated individuals had higher pupal masses). Overall, our results demonstrate that high density and fungal pathogens both induce a higher immune response compared to low density and pathogen-free environments, but this comes with a cost of a longer larval period and reduced body mass.