Chronic gill-associated virus (GAV) infection is endemic in Penaeus monodon broodstock captured from north-east Queensland in Australia and in farmed shrimp produced from these. We investigated the role of vertical transmission in perpetuating the high prevalence of these chronic GAV infections. Reverse transcription (RT)-nested PCR detected GAV in spermatophores and mature ovarian tissue from broodstock and in fertilized eggs and nauplii spawned from wild-fertilized females. In laboratory-reared P. monodon (> 12 mo old) that had a high mortality rate, RT-nested PCR detected GAV in male spermatophores at levels significantly higher than that detected in the lymphoid organ. By transmission electron microscopy (TEM), GAV virions were detected in spermatophore seminal fluid, but not sperm cells. Histological evidence of hypertrophied cell foci (spheroids) and TEM observation of GAV nucleocapsids and virions in spheroid cells was also found in 100% of lymphoid organs of approximately 1.2 g juvenile P. monodon reared in the laboratory from postlarvae collected from commercial hatcheries. Sequence analysis of PCR amplicons from parental P. monodon and fertilized eggs of artificially inseminated broodstock indicated that GAV associated with eggs can originate from both the male and female parents. Although the female GAV genotype was predominant in eggs, there was some dependence on infection levels in the male and female shrimp as indicated by RT-PCR. RT-nested PCR data on GAV levels in eggs, nauplii, protozoea and PL5 progeny of the artificial matings suggests that vertically transmitted virus is most probably associated with the egg surface.