An aposymbiotic strain of Hydra viridis became infected with free-living Chlorella sp. A stable symbiosis formed that differed in its characteristics from other known Chlorella/Hydra symbioses. The algae reproduced and formed clusters in host endodermal cells, inside large vacuoles filled with an electron-dense substance. A few algae were found to be digested by the hydra, but the apparently uncontrolled reproduction rate of the algae more than compensated for this loss. Surplus algae were expelled into the coelenteron and eventually into the surrounding medium. The expelled algae were repeatedly re-engulfed by the hydra during its feeding, forming a process of continuous reinfection. We suggest that such repeated reinfection of the hydra by the expelled algae provides the host with an endless number of Chlorella from which it might in time select a suitable adapted, controllable symbiont. The present newly formed symbiosis might serve as a model for the study of evolution of algal endosymbioses.