The phylogenetic affinities of Buddenbrockia, a nematode-like parasite of freshwater bryozoans, have remained unknown since it was first reported in the nineteenth century. The discovery of Buddenbrockia parasitic in Hyalinella punctata in Ohio and Plumatella repens in France has provided material for the first ultrastructural study of this animal. This has revealed the presence of polar capsules, diagnostic myxozoan features, in the body wall. Other features, which place Buddenbrockia firmly among tetracapsulid myxozoans in the Class Malacosporea, are the unusual morphology of the polar capsules, the absence of the external tube in capsulogenesis, the body wall with its unusual cell junctions and utilization of freshwater bryozoans as hosts. The ultrastructural study has established the triploblastic organization of Buddenbrockia by confirmation of the presence of an inner layer of cells and 4 sets of longitudinal muscles. Our studies have, thus, simultaneously revealed that Buddenbrockia is a myxozoan and that the myxozoans are derived from bilaterians. The latter conclusion resolves the ongoing controversy over the triploblastic versus diploblastic nature of the Myxozoa. Our studies also provide evidence that bryozoans are ancestral hosts for the myxozoans and that loss of triploblast features has characterized the major radiation of the better known endoparasites of fish and worms in the Class Myxosporea.