Gonadal infections by a novel microsporidium were discovered in 34% (13/38) of arrow gobies, Clevelandia ios, sampled over a 3-yr period from Morro Bay Marina in Morro Bay, California. Gonadal tumors had been reported in arrow gobies from this geographic area. The infected gonads, found primarily in females, typically appeared grossly as large, white-gray firm and lobulated masses. Histological examination revealed large, multilobate xenomas within the ovaries and no evidence of neoplasia. Typical of the genus Ichthyosporidium, the large xenomas were filled with developmental stages and pleomorphic spores. Wet mount preparations showed two general spore types: microspores with mean length of 6.2 (7.0-4.9, SD = 0.6, N = 20) μm and mean width of 4.3 (5.3-2.9, SD = 0.8) μm; and less numerous macrospores with mean length of 8.5 (10.1-7.1, SD = 1.0, N = 10) μm and mean width of 5.5 (6.2-4.8, SD = 0.5) μm. Transmission electron microscopy demonstrated stages consistent with the genus and 35-50 turns of the polar filament. Small subunit rDNA gene sequence analysis revealed that the parasite from arrow gobies was most closely related to, but distinct from Ichthyosporidium sp. based on sequences available in GenBank. We conclude that this microsporidium represents a new species of Ichthyosporidium, the first species of this genus described from a member of the family Gobiidae and from the Pacific Ocean.