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Female-biased sex-ratio distortion is often observed in hosts infected with vertically-transmitted microsporidian parasites. This bias is assumed to benefit the spread of the parasite, because male offspring usually do not transmit the parasite further. The present study reports on sex-ratio distortion in a host-parasite system with both horizontal and vertical parasite transmission: the microsporidium Octosporea bayeri and its host, the planktonic cladoceran Daphnia magna. In laboratory and field experiments, we found an overall higher proportion of male offspring in infected than in uninfected hosts. In young males, there was no parasite effect on sperm production, but, later in life, infected males produced significantly less sperm than uninfected controls. This shows that infected males are fertile. As males are unlikely to transmit the parasite vertically, an increase in male production could be advantageous to the host during phases of sexual reproduction, because infected mothers may obtain uninfected grandchildren through their sons. Life-table experiments showed that, overall, sons harboured more parasite spores than their sisters, although they reached a smaller body size and died earlier. Male production may thus be beneficial for the parasite when horizontal transmission has a large pay-off as males may contribute more effectively to parasite spread than females. (c) 2007 Australian Society for Parasitology Inc. Published by Elsevier Ltd. All rights reserved.