Ecology of the glacial relict macrocrustacean Gammaracanthus lacustris, a rare inhabitant of deep Fennoscandian lakes, is poorly understood. We studied the life cycle and trophic position of this cold‐stenothermic amphipod in Lake Paasivesi, eastern Finland. The study is based on intensive sampling and analyses of fatty acid composition as well as stable carbon (δ13C) and nitrogen (δ15N) isotope ratios. Both day and night, the G. lacustris population occurred at depths below 25 m at temperatures <8°C, and the density increased towards the bottom of the lake, where it was 0.4–0.6 individuals/m3. Gammaracanthus lacustris was observed to reach a length of >40 mm and live up to 4 years. The oldest and the largest individuals and females seemed to favour the deepest zones. In October, almost 100% of females with length at least 25 mm (i.e. females presumably at least 1‐year‐old) had an embryo sack with 20–200 eggs or embryos—the larger the female, the more young it had. The developing eggs of G. lacustris had a very high fatty acid content, indicating that the females invest heavily on provisioning their young. Furthermore, the fatty acid composition differed among life stages, and in particular the eggs had a higher proportion of eicosapentaenoic acid than juveniles or adults. The stable δ13C and δ15N isotope ratios and fatty acid biomarkers of the food web, together with visual observations, indicate that G. lacustris is a carnivore that feeds mainly on zooplankton and other relict macrocrustaceans. Due to its high content of essential polyunsaturated fatty acids, G. lacustris is a valuable prey for fish and other predators in the food web. However, as a glacial relict with strict habitat requirements the species is vulnerable to global warming and local environmental changes. These facts should be considered in the management of lakes and their catchments.