Changes in host phenotype are often attributed to manipulation that enables parasites to complete trophic transmission cycles. We characterized changes in host phenotype in a colonial host–endoparasite system that lacks trophic transmission (the freshwater bryozoan Fredericella sultana and myxozoan parasite Tetracapsuloides bryosalmonae). We show that parasitism exerts opposing phenotypic effects at the colony and module levels. Thus, overt infection (the development of infectious spores in the host body cavity) was linked to a reduction in colony size and growth rate, while colony modules exhibited a form of gigantism. Larger modules may support larger parasite sacs and increase metabolite availability to the parasite. Host metabolic rates were lower in overtly infected relative to uninfected hosts that were not investing in propagule production. This suggests a role for direct resource competition and active parasite manipulation (castration) in driving the expression of the infected phenotype. The malformed offspring (statoblasts) of infected colonies had greatly reduced hatching success. Coupled with the severe reduction in statoblast production this suggests that vertical transmission is rare in overtly infected modules. We show that although the parasite can occasionally infect statoblasts during overt infections, no infections were detected in the surviving mature offspring, suggesting that during overt infections, horizontal transmission incurs a trade-off with vertical transmission.