A new species of aquatic Phycomycetes, Physoderma dulichii Johns, parasitic on the aquatic sedge Dulichium arundinaceum (L.) Britt., has been described from northern Michigan. This parasite infects the upper epidermal cells of the leaves of the host and causes the death of the infected cells, but the Dulichium plants are otherwise not affected by the fungus. Macroscopically, the presence of P. dulichii is indicated by the presence of striking brown bands with irregular margins at intervals on the upper surfaces of the leaves. A study of the life history of the fungus indicates that, like other species of Physoderma, this organism’s development includeds two distinct phases, an epibiotic monocentric phase which produces asexual zoospores and an endobiotic polycentric phase which produces thick-walled resting spores that germinate to form zoospores. That epibiotic sporangia may function as gametangia as well as produce asexual reproductive zoospores has not been demonstrated. The morphology and development of the two phases and of resting spore germination have been reported in detail. Germination studies indicate that resting spores must undergo an extensive period of maturation at low temperatures prior to germination and that the spores lose their viability on drying. Inoculation studies have shown that 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. 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. Physoderma dulichii occurs in a wide variety of habitats in thirteen states in the northeastern United States and three eastern provinces of Canada. It is known to have occurred in its present range for more than sixty-four years. Its geographical distribution shows correlation with the drainage basins of the Great Lakes, the St. Lawrence River, and the northern Atlantic Coastal Plain. This limited distribution within the much larger host range is discussed, and it is suggested that Physoderma dulichii may have had its origin in the Great Lakes area and that its subsequent dispersal is chiefly by means of transport of resting spores by the waters of these lakes and their associated river systems.