During the period from January 2002 to March 2007, infections by melanized fungi were identified with greater frequency in aquarium-maintained leafy seadragons (Phycodurus eques) and weedy seadragons (Phyllopteryx taeniolatus), pivotal species to the educational and environmental concerns of the aquarium industry and conservation groups. The objective of this study was to characterize the pathology and identify fungi associated with phaeohyphomycotic lesions in these species. Samples from 14 weedy and 6 leafy seadragons were received from 2 institutions and included fresh, frozen, and formalin-fixed tissues from necropsy and biopsy specimens. Fresh and frozen tissues were cultured for fungi on Sabouraud dextrose agar only or both Sabouraud dextrose agar and inhibitory mold agar with gentamicin and chloramphenicol at 30 degrees C. Isolates were processed for morphologic identification and molecular sequence analysis of the internal transcribed spacer region and D1/D2 domains of the large subunit ribosomal RNA gene. Lesions were extensive and consisted of parenchymal and vascular necrosis with fungal invasion of gill (11/20), kidney (14/20), and other coelomic viscera with or without cutaneous ulceration (13/20). Exophiala sp. isolates were obtained from 4 weedy and 3 leafy seadragons and were identified to species level in 6 or 7 instances, namely Exophiala angulospora (1) and a novel species or Exophiala (5), based oil nucleotide sequence comparisons and phylogenetic analyses. Disseminated phaeohyphomycosis represents an important pathologic condition of both weedy and leafy seadragons for which 2 species of Exophiala, 1 a novel species, have been isolated.