Direct transmission from parents to offspring, referred to as vertical transmission, occurs within essentially all major groups of pathogens. Several microsporidia (Phylum Microsporidia) that infect arthropods employ this mode of transmission, and various lines of evidence have suggested this might occur with certain fish microsporidia. The microsporidium, Pseudoloma neurophilia, is a common pathogen of the laboratory zebrafish, Danio rerio. We previously verified that this parasite is easily transmitted horizontally, but previous studies also indicated that maternal transmission occurs. We report here direct observation of Pseudoloma neurophilia in the progeny of infected zebrafish that were reared in isolation, including microscopic visualization of the parasite in all major stages of development. Histological examination of larval fish reared in isolation from a group spawn showed microsporidian spores in the resorbing yolk sac of a fish. Infections were also observed in three of 36 juvenile fish. Eggs from a second group spawn of 30 infected fish were examined using a stereomicroscope and the infection was observed from 4 to 48 hours post-fertilization in two embryos. Intraovum infections were detected in embryos from 4 of 27 pairs of infected fish that were spawned based on qPCR detection of P. neurophilia DNA. The prevalence of intraovum infections from the four spawns containing infected embryos was low (∼1%) based on calculation of prevalence using a maximum likelihood analysis for pooled samples. Parasite DNA was detected in the water following spawning of 11 of the infected pairs, suggesting there was also potential for extraovum transmission in these spawning events. Our study represents the first direct observation of vertical transmission within a developing embryo of a microsporidian parasite in a vertebrate. The low prevalence of vertical transmission in embryos is consistent with observations of some other fish pathogens that are also readily transmitted by both vertical and horizontal routes.