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External yolk sacs in free-living larvae of marine invertebrates are extremely rare, with all reported cases exhibiting yolk that is taken up through connection with the anterior alimentary canal. Herein, we confirm a novel yolk sac connected to the posterior end of the alimentary canal in the first larval stage of species in the bopyrid isopod genus Pleurocryptella Bonnier, 1900 , all known as ectoparasites in the branchial chambers of squat lobsters. Pleurocryptella poseidon Williams & Boyko sp. nov. infesting the munidopsid Galacantha   bellis   Henderson, 1885 in the Arabian Sea, is described on the basis of adults and larvae. In common with conspecifics, the new species exhibits a suite of putative "primitive" characters including the presence of oostegites on the sixth and seventh pereomeres of females and maxillipeds and articulated uropods in males. Pleurocryptella poseidon Williams & Boyko sp. nov. differs from other species of Pleurocryptella by characters of body shape, antennae, oostegite 1, pleon, and uropods of females and midventral tubercles, pleomeres, and pleopods of males. The epicaridium larvae have a large posterior, external yolk sac and segmented maxillipeds, a unique set of characters within Epicaridea. In addition to larval and adult characters, molecular data (COI) indicate that the genus is distinct from other members of Bopyridae, so we erect the new subfamily Pleurocryptellinae for it. Pleurocryptella poseidon Williams & Boyko sp. nov. bears a new genus and species of hyperparasitic isopod that is herein described based on its cryptoniscus stage. A review of epicaridium larval morphology and a key to the species of Pleurocryptella are provided. [ABSTRACT FROM AUTHOR]