Entomopathogenic nematodes are generally considered beneficial organisms. However, they can affect beneficial insects such as parasitoids. The infectivity of Steinernema carpocapsae (Mexican strain) to Cardiochiles diaphaniae Marsh, a solitary internal wasp parasitoid of melonworm, Diaphania hyalinata (L.), and pickleworm, D. nitidalis (Stoll), was determined under laboratory conditions. S. carpocapsae induced 100% infection in melonworm hosts during exposure periods of 6, 24, 36, and 48 h. The number of nematodes penetrating the host was proportional to the length of exposure period, and the emergence rate of wasp parasitoids was inversely proportional to exposure time. Though only 0–10% of immature C. diaphaniae were parasitized by nematodes within hosts, newly emerged and, to a lesser degree, cocoon-spinning wasp larvae were readily infected by nematodes. In contrast, pupae of C. diapahaniae in completely formed cocoons were resistant to infection. S. carpocapsae adversely affected C. diaphaniae developing in melonworm principally by causing the premature death of the host before the wasp could complete its development. If the wasp larvae were 6 or 7 d old when the melonworm host was parasitized by nematodes, then all the wasp larvae died. However, if the wasp larvae were 8 d old when nematodes parasitized the melonworm, then 39–92% of the melonworms successfully produced wasp parasitoids. Many wasp larvae that emerged from nematode-parasitized melonworms did not form cocoons, and died within 24 h of emergence. However, only a small proportion of the larvae contained nematodes as determined by dissection. The percentage of infected parasitoids and the proportion of emerged parasitoid larvae dying increased as the exposure time to nematodes increased. Overall, S. carpocapsae nematodes are somewhat compatible with parasitoids because they do not kill all parasitoids, and the pupal stage is resistant to infection. However, the direct and indirect mortality of wasps caused by nematodes could result in some interference with biological suppression.