Development of a new species of malacosporean myxozoan (Buddenbrockia allmani n. sp.) in the bryozoan Lophopus crystallinus is described. Early stages, represented by isolated cells or small groups, were observed in the host's body wall or body cavity. Multiplication and rearrangement of cells gave an outer cell layer around a central mass. The outer cells made contact by filopodia and established adherens junctions. Sporoplasmosomes were a notable feature of early stages, but these were lost in subsequent development. Typical malacosporean sacs were formed from these groups by attachment of the inner (luminal) cells by a basal lamina to the outer layer (mural cells). Division of luminal cells gave rise to a population of cells that was liberated into the lumen of the sac. Mitotic spindles in open mitosis and prophase stages of meiosis were observed in luminal cells. Centrioles were absent. Detached luminal cells assembled to form spores with four polar capsules and several valve cells surrounding two sporoplasms with secondary cells. Restoration of sporoplasmosomes occurred in primary sporoplasms. A second type of sac was observed with highly irregular mural cells and stellate luminal cells. A radially striated layer and dense granules in the polar capsule wall, and previous data on 18 rDNA sequences enabled assignment of the species to the genus Buddenbrockia, while specific diagnosis relied on the rDNA data and on sac shape and size.