The phylogenetic position of bryozoans has been disputed for decades, and molecular phylogenetic analyzes have not unequivocally clarified their position within the Bilateria. As probably the most basal bryozoans, Phylactolaemata is the most promising taxon for large-scale phylogenetic comparisons. These comparisons require extending the morphological and developmental data by investigating different phylactolaemate species to identify basal characters and resolve in-group phylogeny. Accordingly, we analyzed the bud development and the organogenesis of the freshwater bryozoan Cristatella mucedo, with special focus on the formation of the digestive tract and differentiation of the coelomic compartments. Most parts of the digestive tract are formed as an outpocketing at the future anal side growing towards the mouth area. The ganglion is formed by an invagination between the anlagen of the mouth and anus. The lophophoral arms develop as paired lateral protrusions into the lumen of the bud and are temporarily connected by a median, thin bridge. All coelomic compartments are confluent during their development and also in the adult. The epistome coelom develops by fusion of two peritoneal infolds between the gut loop and overgrows the ganglion medially. The coelomic ring canal on the oral side develops by two lateral ingrowths and supplies the oral tentacles. On the forked canal, supplying the innermost row of tentacles above the epistome, a bladder-shaped swelling, probably with excretory function, is present in some adults. It remains difficult to draw comparisons to other phyla because only few studies have dealt with budding of potentially related taxa in more detail. Nonetheless, our results show that comparative organogenesis can contribute to phylactolaemate systematics and, when more data are available, possibly to that of other bryozoan classes and bilaterian phyla. J. Morphol., 2011. © 2010 Wiley-Liss, Inc.