Parasites can structure biological communities directly through population regulation and indirectly by processes such as apparent competition. However, the role of parasites in the process of biological invasion is less well understood and mechanisms of parasite mediation of predation among hosts are unclear. Mutual predation between native and invading species is an important factor in determining the outcome of invasions in freshwater amphipod communities. Here, we show that parasites mediate mutual intraguild predation among native and invading species and may thereby facilitate the invasion process. We find that the native amphipod Gammarus duebeni celticus is host to a microsporidian parasite, Pleistophora sp. (new species), with a frequency of infection of 0–90%. However, the parasite does not infect three invading species, G. tigrinus, G. pulex and Crangonyx pseudogracilis. In field and laboratory manipulations, we show that the parasite exhibits cryptic virulence: the parasite does not affect host fitness in single–species populations, but virulence becomes apparent when the native and invading species interact. That is, infection has no direct effect on G. d. celticus survivorship, size or fecundity; however, in mixed–species experiments, parasitized natives show a reduced capacity to prey on the smaller invading species and are more likely to be preyed upon by the largest invading species. Thus, by altering dominance relationships and hierarchies of mutual predation, parasitism strongly influences, and has the potential to change, the outcome of biological invasions.