The unusual alpheid shrimp Racilius compressus was first descriptionbed by Paulson in 1875, from specimens from the Red Sea. There were no subsequent reports of the species outside the Red Sea until its rediscovery in Mozambique by Barnard (1955). It has since been reported from Madagascar, East Africa, Thailand, Singapore and Queensland, Australia. It is of widespread occurrence on western Indian Ocean reefs where the normal host coral Galaxea fasciculatis L. occurs. No other species have been referred to the genus Racilius Paulson. R. compressus is note-worthy for its extremely strongly bilaterally compressed body and its association with an oculunid coral, a host not adopted by any other commensal species of the Alpheidae. Specimens of Racilius compressus collected from the coral reefs around Zanzibar Harbour were noted to carry relatively few but large ova, and a female with ova at an advanced stage of development was maintained in sea water until the ova hatched. The first stage was found to hatch with well developed first and second pereiopods and with rudimentary pleopods on all abdominal segments, in a more advanced stage than is typical for the majority of alpheid shrimps. Abbreviated development of larvae has been reported so far in two genera of the Alpheidae, only, Alpheus Fabricius and Synalpheus Bate, and is an uncommon phenomenon in coral reef Caridea.