Several ornamental fish farms in Florida have experienced recent economic losses caused by an undescribed heterophyid trematode. This parasite infects a broad range of host species. It elicits intense proliferation of gill filament cartilage resulting in total disruption of the normal gill architecture and loss of respiratory epithelium. Afflicted fish are unsightly and cannot be sold. We are presently describing the parasite, probably a member of the Ascocotyle complex (Heterophyidae). We obtained gravid adult worms by feeding tissues from infected fish to day-old chicks and to mice. Completion of the life-cycle required three host species, an operculate snail (Melanoides tuberculata) that has become established on several fish farms, any of a large variety of tropical aquarium fishes being reared on these farms, and most probably one or several fish-eating birds that feed in the ponds. We examined the morphogenesis of cartilage formation histologically and ultrastructurally. Results suggest that cartilage may arise from proliferating and differentiating fibroblastic or mesenchymal stem cells normally present in small numbers within the gill filament stroma. By four days post-infection, fibroblastic stem cells transformed into highly active secretory cells resembling chondrocytes. These cells elaborated cartilage matrix. Cartilage formation proceeded from the metacercarial cyst wall outward, suggesting possible involvement of a parasite-derived excretory/secretory product. This study was conducted in cooperation with the U.S. Department of Commerce, NOAA, NMFS, PL99-659, Project No. 2-lJ-3.