Parasites can negatively affect the reproductive success of hosts. Placental species may be particularly susceptible, because parasite-induced stress during pregnancy could potentially influence embryo development. Here we examine the consequences of a trematode infestation (black spot disease, BSD) for fetal development and adult behavior in 19 natural populations of the placental live-bearing fish species Poeciliopsis retropinna (Poeciliidae) in Costa Rica. First, we observed substantial variation in parasite infestation among populations which correlated with a number of local environmental conditions (elevation, river width, depth, and flow velocity). Furthermore, we observed substantial variation in parasite infestation among females within populations associated with maternal age and size. We found that the infestation rate significantly influenced embryonic development, with more heavily parasitized females producing smaller and worse-conditioned offspring at birth, possibly because a costly immune response during pregnancy limits, either directly or indirectly, nourishment to developing embryos. Finally, a behavioral experiment in the field showed that the infestation rate did not affect an individual’s boldness. Our study indicates that in placental live-bearing fish parasite infestation leads to reduced embryo provisioning during pregnancy, resulting in a smaller offspring size and quality at birth potentially with negative implications for offspring fitness.