Summary This study was aimed to determine the parasitism rates of the galling psyllid Baccharopelma dracunculifoliae (Hemiptera: Psyllidae), and the effects of parasitoid attack on gall growth dynamics. Also, life history traits of the most common parasitoid, Psyllaephagus baccharidis (Hymenoptera: Encyrtidae), are described. A cohort of galls was followed throughout its development, and a sample of galls was collected monthly from April to August 1999. Furthermore, a caging experiment was performed to determine the periods of parasitoid attack. Parasitism rates reached 45.2% at the end of gall development, and the caging experiment suggested that most of the attack occurred at the beginning of gall development. P. baccharidis was responsible for 93% of the observed parasitism. This koinobiont parasitoid attacked galls early during their development and probably stimulated nymph feeding, causing a higher growth of parasitised galls. This alteration in gall growth dynamics may have indirect, harmful consequences to the host plant, since larger galls usually are stronger nutrient sinks for the plant. Healthy nymphs of B. dracunculifoliae growing in galls with parasitised nymphs had a larger size than healthy nymphs in unparasitised clutches, regardless of nymph number. This may have unexpected beneficial consequences to the galling psyllid, since the resultant larger adults may have increased survivorship and reproductive success. These results contrast with the common view that parasitoids are always beneficial to the host plant in three-trophic systems, and koinobiont parasitoids may constitute exceptions due to their feeding behaviour.