Lesions are described in farmed Penaeus monodon affected with a previously unreported, fatal disease, 'peripheral neuropathy and retinopathy' (PNR). Outbreaks, associated with minor to heavy mortalities, occurred in 22 of 25 ponds on a farm in eastern Australia during the mid to late 1998/99 growout period. Moribund prawns, 5 to 26 g mean body weight, gathered at pond edges and were typically reddish in colour, lethargic, with mild to moderate epibiotic fouling and 1 or more partially amputated appendages. Histologically, there was mild to severe, focal to diffuse degeneration and necrosis of axons and their sheaths, together with associated glial cell apoptosis, in peripheral nerve fibres. Of the 3 appendage types examined systematically, these pathognomonic lesions were most common and severe in proximal antennal nerves and less common and severe in distal antennal nerves, antennular nerves and pereiopod nerves. Mild to severe, acute to chronic retinitis, associated with degeneration and necrosis of retinular cells and their axons, was also present in most clinically affected prawns. Transmission electron microscopy revealed moderate to large numbers of intracytoplasmic rod-shaped, helical nucleocapsids and enveloped virions, morphologically consistent with a yellow head-like virus, in putative glial cells in the antennal nerve, in the fasciculated zone of the eye and in putative sensory nerve cells of antennules. Immunohistochemical examination revealed lesions, but not histologically normal tissues, in peripheral nerves, eyes, lymphoid organ and vas deferens that consistently stained positively for a yellow head-related virus. The findings strongly suggest that a yellow head-related virus such as the Australian gill-associated virus (GAV) is causally associated with PNR. It is likely that PNR was not recognised during earlier investigations of mid-crop mortalities of farmed P. monodon in eastern Australia because appropriate peripheral nerves and eyes were not routinely examined histologically.