Tetracapsula bryosalmonae, formerly PKX organism, is a myxozoan parasite that causes proliferative kidney disease in salmonid fish. Its primary hosts, in which it undergoes a sexual phase, are phylactolaemate bryozoans. It develops in the bryozoan coelomic cavity as freely floating sacs which contain two types of cells, stellate cells and sporoplasmogenic cells, which become organised as spores. Eight stellate cells differentiate as four capsulogenic cells and four valve cells which surround a single sporoplasmogenic cell. The sporoplasmogenic cell undergoes meiosis and cytoplasmic fission to produce two sporoplasms with haploid nuclei. Sporoplasms contain secondary cells. The unusual development supports previously obtained data from 18S rDNA sequences, indicating that species of Tetracapsula form a clade. It diverged early in the evolution of the Myxozoa, before the radiation that gave rise to the better known genera belonging to the two orders in the single class Myxosporea. The genus Tetracapsula as seen in bryozoans shares some of the characters unique to the myxosporean phase and others typical of the actinosporean phase of genera belonging to the class Myxosporea. However, it exhibits other features which are not found in either phase. A new class Malacosporea and order Malacovalvulida are proposed to accommodate the family Saccosporidae and genus Tetracapsula. Special features of the new class are the sac-like proliferative body, valve cells not covering the exit point of the polar filament, lack of a stopper-like structure sealing the exit, maintenance of valve cell integrity even at spore maturity, absence of hardened spore walls and unique structure of sporoplasmosomes in the sporoplasms.