Akainothrips francisi sp. nov. is shown to be an inquiline (i.e. it invades, and breeds within, domiciles of another species). Currently, its only known host is Dunatothrips aneurae, a subsocial thrips that creates silken domiciles by securing together phyllodes of mulga (Acacia aneura) in the arid zone of Australia. We found Ak. francisi prolifically breeding inside live D. aneurae host domiciles, both immature and mature. Akainothrips francisi did not kill its host and we saw no evidence of antagonistic host-inquiline interactions. This is thus the second demonstrably inquiline species of Acacia thrips, although other possible inquilines have been suggested including two Akainothrips. We found that Ak. francisi occurred with positive density dependence, and was associated with moderately reduced host reproduction. This latter association was especially evident in larger host domiciles, suggesting that Ak. francisi either inhibits further host reproduction after invasion or exploits poor quality hosts more successfully. Sex ratios were slightly female biased. Akainothrips francisi males were exceptionally variable in size, colour, and foreleg size compared to females, with morphs co-occurring within domiciles, suggesting sexual selection and the possibility of different male reproductive strategies. The discovery of Ak. francisi highlights particular morphological affinities among known or suspected inquiline Acacia thrips within Akainothrips and other genera, allowing us to hypothesize a common origin of this lifestyle from within Akainothrips. © 2012 The Linnean Society of London, Biological Journal of the Linnean Society, 2012, ••, ••–••.