Larvae of the African armyworm, Spodoptera exempta, are darker and more resistant to baculovirus infection when reared in groups (gregarious form) compared to being reared singly (solitary form). Lepidoptera that survive virus challenge as larvae could potentially retain a sublethal virus infection which is then transmitted vertically to the next generation. Here we examine whether gregarious and solitary forms of the armyworm differ in the costs of surviving virus infection and in their capacity to transmit an active baculovirus infection to their offspring. Pupae of larvae reared gregariously that survived virus challenge weighed significantly less than uninfected individuals, but this was not so for those reared solitarily. This did not, however, translate into differences in fecundity, at least under laboratory conditions. As found in previous studies, pre-oviposition period was shorter for solitary than gregarious insects, and it was also shorter for females that had been challenged with virus as larvae. Both the prevalence of egg batches containing larvae that died from nucleopolyhedrovirus (NPV) infection and the proportion of infected larvae within each egg batch were significantly increased (approximately doubled) when parental moths were previously challenged with the virus during their larval state. This demonstrates that horizontal transmission in one generation can elevate vertical transmission to the next generation. Moreover, prevalence of overt infection in the offspring generation was two to three times greater when parental moths were reared solitarily as larvae than when reared gregariously. Disease prevalence and proportional infection were both independent of the sex of the infected parent and whether or not the egg batch was surface-sterilized to remove potential contaminants. This suggests that the eggs are infected internally (transovarial) rather than externally (transovum). These results help to shed light on the observed temporal pattern of virus epizootics in eastern Africa.