Certain benthic polychaetes, such as species within the genus Namalycastis, are employed in the diet of gravid shrimps in aquaculture due to their amino acids and highly unsaturated fatty acid content, enhancing the quality of gravid shrimp. Despite its importance in the rapidly developing shrimp culture industry, the population parameters of this economically valuable species are unknown. Therefore, the present study examines the population parameters of Namalycastis fauveli to assess its occurrence, growth, recruitment, exploitation level, and stock status in Bangladesh. Monthly samplings of N. fauveli and environmental variables were collected from five sites of the Cox’s Bazar coast using a square-shaped mud corer with a 0.093 m2 (or 1.0 ft2) mouth opening from August 2020 to July 2021 to measure or estimate. Within the 8.0–30.0 cm depth range of the intertidal zone, polychaete samples were collected from the sediment. The results showed negative allometric growth (b < 3), but there was a significant L–W relationship (p < 0.05, r2 = 0.43 to 0.94). The estimated L∝, K, and ϕ were 22.05 cm, 0.99 year−1, and 2.69, respectively, while total mortality (Z) was 4.56 year−1. It was calculated that the fishing mortality and capture probability proportionally increased with the total length at a certain age. Recruitment mostly occurred in October and March, and temperature had a greater impact than salinity. The evaluated exploitation level (E = 0.57) indicated that the stock was overexploited. Thus, the above results provide some valuable information for shrimp farmers and stakeholders, as well as for policymakers in the move towards restoration, species conservation, and efficient management of N. fauveli natural stocks.