Endophytic and epiphytic infections have caused serious problems for Kappaphycus farmers, such as reduction in biomass production and decrease in the yield and quality of carrageenan. During environmental monitoring from January 2011 to December 2012, along Pitimbu Beach, Paraiba State, northeastern Brazil, drifting thalli of Kappaphycus alvarezii (Gigartinales, Rhodophyta) were detected with red spots, apparently caused by epiphytic/endophytic infections. Therefore, drifting thalli of K. alvarezii farmed along the northeastern Brazilian coast were cultured in the laboratory and submitted to molecular and morphological analyses to identify and characterize the causative agent and its effects on the cellular structure and ultrastructure of the host alga K. alvarezii that was found to be infected by the endophyte Colaconema infestans (Colaconematales) identified through morphological and rbcL molecular evidence. Infected thalli of K. alvarezii were processed and analyzed through light, transmission electron, and scanning electron microscopy. Alterations were observed in morphology and cellular organization, including structural changes of chloroplasts and decrease in floridean starch grains, along with increased cell wall thickness. Therefore, while no outbreak has been reported, the discovery of C. infestans infection in drifting thallus of K. alvarezii suggests a potential threat to its cultivation that should be monitored.