A new entomopathogenic nematode species from Australia, Heterorhabditis gerrardi n. sp. (Nematoda: Heterorhabditidae) is described. Morphological and molecular studies together with cross-hybridization tests indicated that this nematode represents a new undescribed species, closely related to members in the 'indica-group'. However, the new species can be distinguished from other species in this genus by a combination of several qualitative and quantitative morphological traits. Key diagnostic features include: body size and excretory pore position of the third-stage infective juveniles; male bursa with a reduction of bursal rays, usually affecting the terminal set of papillae, with symmetrical or asymmetrical loss of one or two pairs; vulva of hermaphrodites more anteriorly located than in other species in the indica-group (V% average: 43), with non-protruding or slightly protruding lips, and longer tail length (average: 1.06 mu m). The new species can be further characterized by molecular traits of sequence data from the internal transcribed spacer (ITS) region of ribosomal DNA. Additionally, the bacterial symbiont of this new species, Photorhabdus asymbiotica Kingscliff strain, was phenotypically characterized and compared with other P. asymbiotica strains. The Kingscliff strain revealed many characters not present in other strains of this species. We hypothesize that the newly found traits may contribute to the maintenance of this mutualistic association of the bacterium with its nematode host.