Target-site insensitivity (TSI) is an important mechanism of animal resistance to natural and man-made toxins. TSI evolved in parallel in the monarch butterfly and other herbivorous insects specializing on toxic milkweeds that carry cardiac glycosides (CGs). TSI represents a key innovation that has facilitated the use of milkweeds as a novel ecological niche. It further allowed sequestration of CGs that may protect these insects from predation and parasitism. Substitution N122H in CGs’ molecular target, the Na+/K+-ATPase alpha subunit, strongly enhances TSI and evolved in parallel in CG-sequestering insects across six orders. Upon performing a screen of Na+/K+-ATPase sequences, we recently identified N122H in the entomopathogenic nematode (EPN) Steinernema carpocapsae, which parasitizes insects around milkweeds. This sets up the possibility that parallel evolution of N122H may not only have facilitated CG sequestration by insects, but also nematode parasitism of CG-carrying insects. Here, we show that N122H is rare among nematodes and that, among species tested for CG tolerance, S. carpocapsae showed significantly stronger insensitivity to diverse CGs than nematodes without N122H. CRISPR gene editing in C. elegans showed N122H is sufficient for overcoming toxicity of CG levels found in sequestering insects. However, N122H was accompanied by costs related to nervous system robustness, potentially explaining its rarity. Finally, S. carpocapsae was the only EPN tested highly successful at infecting CG-carrying insects and that displayed attraction to CGs. Our results suggest convergent molecular evolution of a key innovation shapes multitrophic interactions involving hosts and parasites that last shared common ancestry 600 MYA.