Colonial hosts offer unique opportunities for exploitation by endoparasites resulting from extensive clonal propagation, but these interactions are poorly understood. The freshwater bryozoan, Fredericella sultana, and the myxozoan, Tetracapsuloides bryosalmonae, present an appropriate model system for examining such interactions. F. sultana propagates mainly asexually, through colony fragmentation and dormant propagules (statoblasts). Our study examines how T. bryosalmonae exploits the multiple transmission routes offered by the propagation of F. sultana, evaluates the effects of such transmission on its bryozoan host, and tests the hypothesis that poor host condition provokes T. bryosalmonae to bail out of a resource that may soon be unsustainable, demonstrating terminal investment. We show that infections are present in substantial proportions of colony fragments and statoblasts over space and time and that moderate infection levels promote statoblast hatching and hence effective fecundity. We also found evidence for terminal investment, with host starvation inducing the development of transmission stages. Our results contribute to a growing picture that interactions of T. bryosalmonae and F. sultana are generally characterized by parasite persistence, facilitated by multiple transmission pathways and host condition-dependent developmental cycling, and host tolerance, promoted by effective fecundity effects and an inherent capacity for renewed growth and clonal replication.