A new species of aquatic Phycomycete, Physoderma dulichii Johns, parasitic on the aquatic sedge Dulichium arundinaceum (L.) Britt., is described from northern Michigan. This parasite infects and kills the upper epidermal cells of the host leaves. Macroscopically, infection by P. dulichii is indicated by striking brown bands with irregular margins, at intervals on the upper surfaces of the leaves. Like other species of Physoderma, this organism’s development includes two distinct phases, an epibiotic monocentric phase producing asexual zoospores and an endobiotic polycentric phase bearing thick-walled resting spores that germinate after an extensive period of maturation at low temperature to form zoospores. The morphology and development of the two phases and of resting spore germination are reported in detail. Only the immature leaves of the host are susceptible to infection, which may be initiated by the introduction of mature resting spores, zoospores from germinated resting spores, or zoospores from epibiotic sporangia. Resting-spore zoospores may also produce the endobiotic stage directly. Initiation of infection in nature requires that the terminal cluster of immature leaves on the host plant be submerged, but infection of subsequently formed leaves of emergent culms can be accomplished through the agency of zoospores from epibiotic sporangia on older leaves. The relation of infected stands of hosts to their environment is discussed and the importance of standing water to infection noted. The geographical distribution of the parasite shows correlation with the drainage basins of the Great Lakes, the St. Lawrence River, and the northern Atlantic Coastal Plain.