Chronic low-grade mortalities became epizootic in a batch of Penaeus esculentus hybridised with Penaeus monodon prawns in Australia. Histopathological examination revealed extensive tissue changes in the gills, hypodermis, antennal gland, heart, ventral nerve cord, lymphoid organ, haematopoietic tissue, muscle and the connective tissue including the intertubule connective tissue in the hepatopancreas. Infected cells displayed intranuclear Cowdrey type A inclusions with marginated chromatin. The inclusions did not stain positively with Feulgen's DNA stain. Electron microscopy showed particles approximately 20 nm in diameter in the cytoplasm near the nucleus but no virions were observed intranuclearly. All the above characters are diagnostic for infectious hypodermal and haematopoietic necrosis virus (IHHNV). Other viruses that were infecting these prawns included lymphoidal parvovirus (LPV), Plebejus baculovirus (PBV), a haemocytic baculovirus and large icosahedral-shaped virus. This is the first record of IHHNV in a country that has not imported live prawns and suggests that IHHNV occurs naturally in the Australian Indo-West Pacific region.