Phytoplankton are traditionally viewed as simple bioaccumulators and key entry points for mercury (Hg) into aquatic trophic chain. However the more recent findings suggest that they can function as dynamic biological systems capable of enhancing Hg cycling reactivity and altering its speciation. Nevertheless, the role of phytoplankton species in mercury transformations remains largely overlooked. The present study examined inorganic mercury (Hg(II)) methylation, monomethylmercury (MeHg) demethylation, and the production of dissolved gaseous mercury (Hg(0)) following exposure to sub-nanomolar concentrations Hg(II) or MeHg, representative of contaminated environments. Diatom Cyclotella meneghiniana was selected as a representative phytoplankton species due to its widespread presence in diverse aquatic ecosystems. To track transformation pathways, isotopically labeled Hg species were used to distinguish between methylation and demethylation processes. The results demonstrated rapid accumulation of both Hg(II) and MeHg in the diatom cells. A cellular demethylation of MeHg into Hg(II), primarily occurring within the cell debris fraction, but no detectable Hg(II) methylation was observed. The reduction of Hg(II) to Hg(0) was found to be biologically mediated and independent of the photosynthetic system. No significant production of Hg(0) after MeHg exposure was determined. Overall, these findings imply that phytoplankton species could actively contribute to mercury cycling in aquatic environments through cellular transformation processes, including MeHg demethylation and Hg(II) reduction.