Abstract. The Microsporidia are a group of obligate intracellular parasites, now thought to be derived fungi. Presented here is a comparative small subunit rDNA (ssrDNA) analysis of 125 species of Microsporidia (sequences obtained from GenBank). This analysis shows that groups or clades are formed based largely on habitat and host. This result is supported by comparative molecular analyses of the past decade, and indicates that structural and ultrastructural characters are unreliable for distinguishing among higher-level microsporidian taxa. Our findings indicate the presence of five major clades of Microsporidia which group according to habitat. We present three new classes of Microsporidia based on natural phylogenetic groupings as illustrated by the ssrDNA analysis: Aquasporidia, Marinosporidia and Terresporidia. The names of the proposed classes reflect the habitat of each group. The class Aquasporidia, found primarily in freshwater habitats, is a paraphyletic group consisting of three clades. The Marinosporidia are found in hosts of marine origin and the Terresporidia are primarily from terrestrial environments.A unique feature of the Microsporidia is the long, coiled polar filament present in the spore, which is used to inject the sporoplasm into the host cell upon spore germination. The polar filament is thought to evert, penetrating the host cell and pulling the sporoplasm into the host cell. This ability of the Microsporidia has apparently allowed these parasites to diverge into numerous animal hosts from many of the animal phyla. This apomorphic feature, and the unique diplokaryon arrangement of the nuclei (in many species) clearly define the Microsporidia structurally.Microsporidia, like all organisms, are classified using common characters which appear as different character states. In the Microsporidia an example of a character used for classification is the nuclear condition, with uninucleate and diplokaryotic character states. Other examples of characters used in the classification of the Microsporidia include the number of coils in the polar filament around the periphery of the spore and the thickness of the polar filament (with isofilar and anisofilar character states). Development of taxonomies is an iterative process in which it is decided which characters change state rapidly and can be used to distinguish genera, species and populations and which characters change state slowly and can be used to distinguish higher levels such as class, order and family. Unfortunately, the characters which are used to determine the higher levels of classification in the Microsporidia (number of nuclei/cell, presence of a membrane surrounding the parasite (sporophorous vesicle), and type of nuclear division) appear to be characters which change states quickly at the genus, species and population levels. Comparative analyses of small subunit ribosomal (ssrDNA) sequence data show that the use of ultrastructural features for taxonomic divisions of the Microsporidia is untenable, and indicate that the Microsporidi...