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A study was conducted to determine the effects, geographical distribution, and prevalence of a microsporan parasite, Glugea stephani, in winter flounder (Pleuronectes americanus) in Newfoundland. Fish were captured by SCUBA divers in several coastal areas, including 2 embayments where pulp and paper mill effluent was discharged, as well as a number of pristine sites. Fish health was assessed by comparing histological profiles, condition factors (K), organosomatic indices and blood values between infected and uninfected samples. Multifocal xenomas of G. stephani were observed in several organs of fish taken near contaminated sites, whereas infected samples captured at a pristine site harbored the cysts only in the wall of the digestive tract. Proliferative inflammation, granuloma formation, and focal necrosis were associated with the infection primarily in the liver and kidney. Condition factors and blood values were lower and ovarian development inhibited or delayed in infected flounder. The multifocal infection occurred only in flounder in 2 embayments in western Newfoundland where pulp and paper mill effluent was discharged. Prevalence varied seasonally, with a peak in autumn and a low in spring. It is likely that the multifocal infection was associated with immunodepression after exposure to the contaminant.