Paranucleospora theridion n. gen, n. sp., infecting both Atlantic salmon (Salmo salar) and its copepod parasite Lepeophtheirus salmonis is described. The microsporidian exhibits nuclei in diplokaryotic arrangement during all known life-cycle stages in salmon, but only in the merogonal stages and early sporogonal stage in salmon lice. All developmental stages of P. theridion are in direct contact with the host cell cytoplasm or nucleoplasm. In salmon, two developmental cycles were observed, producing spores in the cytoplasm of phagocytes or epidermal cells (Cycle-I) and in the nuclei of epidermal cells (Cycle-II), respectively. Cycle-I spores are small and thin walled with a short polar tube, and are believed to be autoinfective. The larger oval intranuclear Cycle-II spores have a thick endospore and a longer polar tube, and are probably responsible for transmission from salmon to L. salmonis. Parasite development in the salmon louse occurs in several different cell types that may be extremely hypertrophied due to P. theridion proliferation. Diplokaryotic merogony precedes monokaryotic sporogony. The rounded spores produced are comparable to the intranuclear spores in the salmon in most aspects, and likely transmit the infection to salmon. Phylogenetic analysis of P. theridion partial rDNA sequences place the parasite in a position between Nucleospora salmonis and Enterocytozoon bieneusi. Based on characteristics of the morphology, unique development involving a vertebrate fish as well as a crustacean ectoparasite host, and the results of the phylogenetic analyses it is suggested that P. theridion should be given status as a new species in a new genus.