Considerable variation exists in parasite virulence and host tolerance which may have a genetic and/or environmental basis. In this article, we study the effects of a striking, mouth-dwelling, blood-feeding isopod parasite (Ceratothoa italica) on the life history and physiological condition of two Mediterranean populations of the coastal fish, Lithognathus mormyrus. The growth and hepatosomatic index (HSI) of fish in a heavily human-exploited population were severely impacted by this parasite, whereas C. italica showed negligible virulence in fish close to a marine protected area. In particular, for HSI, the parasite load explained 34.4% of the variation in HSI in the exploited population, whereas there was no significant relationship (0.3%) between parasite load and HSI for fish in the marine protected area. Both host and parasite populations were not differentiated for neutral genetic variation and were likely to exchange migrants. We discuss the role of local genetic adaptation and phenotypic plasticity, and how deteriorated environmental conditions with significant fishing pressure can exacerbate the effects of parasitism. © 2012 The Linnean Society of London, Biological Journal of the Linnean Society, 2012, 105, 842–852.