Infection of nematodes by conidia of Drechmeria coniospora was studied by optical- and electron microscopy. After penetration, trophic hyphae invaded solely via the pseudocoel; penetration of internal organs was never observed. The invading hyphae had a characteristic wave-like appearance, this pattern possibly having the advantage of preventing rupture of hyphae due to host movements. After death of the host 30–48 h after infection, trophic hyphae contained numerous lipid droplets often associated with microbodies (peroxisomes) which were characterized by the presence of catalase and the β-oxidation enzyme thiolase. Conidiophores developed from tips of trophic hyphae; the process of outgrowth being similar to that for initial penetration in that it occurred via enzymic action and mechanical force. Intimate association between fungal cell wall and nematode cuticle suggested that leakage of nematode contents was prevented after outgrowth. Conidiophores possessed an electron dark layer at the outside of their wall which was not continuous with developing conidia. Numerous spores were successively formed from each individual peg present on the conidiophore. Pegs were ordered at regular distances, located in close proximity to septa and on the apical end of the conidiophore. Invariably immature spores are formed; development of the adhesive knob occurred after release from the peg. Approximately 5000–10 000 spores were formed at the expense of a single nematode. © 1991, British Mycological Society. All rights reserved.