Mercury and its compounds have been parts of widespread pollutants of the aquatic environment. The present study was designed to assess the effect of mercury on fish immune responses. Since the metal is absorbed by fish and passed up the food chain to other fish-eating species, it not only affects aquatic ecosystems but also humans through bioaccumulation. In the present study, it was found that innate immunity of the fresh water fish Channa punctatus Bloch. was significantly debilitated after a periods of exposure to a sub-lethal concentration of mercury (0.3 mg/L). After 7 days of exposure, phagocytosis, cell adhesion and intracellular killing activity were found to decrease significantly along with significant decreases in nitric oxide (NO) and myeloperoxidase (MPO) production from macrophages as compared to the control group indicating intracellular damages. Levels of pro-inflammatory cytokines like TNF-α and IL-6 were found to be significantly more in mercury treated groups than that of control group indicating inflammatory damage. This included significant ultrastructural changes like fragmented epithelium, lesions in mucosal foldings, degenerated mitochondria, reduction in the number of goblet cells and disoriented microvilli as evident from transmission electron micrographs.