Proliferative kidney disease (PKD), caused by the malacosporean parasite, Tetracapsuloides bryosalmonae, is a major disease of salmonid culture both in western Europe and North America. The fish are infected from spores that develop within freshwater bryozoans and are released into the water column. Although sporogenesis has been studied in the bryozoan host and occurs within sacs, the formation of these sacs from presaccular stages has only been hypothesized. Examination of infected bryozoans by using a range of techniques identified proliferating, presaccular amoeboid stages of T. bryosalmonae on the body wall of the bryozoan Fredericella sultana. These stages possessed unique electron-dense bodies and were observed as aggregating within the bryozoan metacoel, differentiating to form spore sacs. Spore sac growth was associated with the assimilation of the presaccular parasites rather than through cryptomitosis of sac mural cells. This sac formation through aggregation and assimilation suggests an intriguing mechanism by which T. bryosalmonae can cross-fertilize.