A xenoma-inducing microsporidian species was found to infect the liver of the teleost fish, peacock wrasse Symphodus (Crenilabrus) tinca. Minimal estimates of the prevalence of the parasite in fishes caught along Tunisian coasts were as high as 43 % for Bizerte samples (over 2 yr) and 72% for Monastir samples (over 3 yr). Developmental stages were dispersed within a xenoma structure that was bounded only by the plasma membrane of the hypertrophic host cell. Ultrastructural features support allocation to the genus Microgemma Ralphs and Matthews, 1986. Meronts were multinucleate plasmodia and were surrounded by rough endoplasmic reticulum (RER) of the host cell. Merogonic plasmodia developed into sporogonic plasmodia, with loss of the RER interface. Sporogony was polysporoblastic. Ovocylindrical spores (3.6 x 1.2 microm) harbored a lamellar polaroplast and a polar tube that was coiled 9 times. Spore features and host specificity led us to propose a new species, Microgemma tincae. The conversion of M. tincae xenomas into well-visible cyst structures or granulomas reflected an efficient host response involving the infiltration of phagocytic cells, degradation of various parasite stages and formation of a thick fibrous wall. The small subunit rDNA gene of M. tincae was partially sequenced. Phylogenetic analysis confirms the placement within the family Tetramicriidae represented by the genera Tetramicra and Microgemma.