Adults of Pseudopolydora rosebelae sp. nov. inhabit silty tubes on muddy bottoms in shallow water in southern Brazil, states of São Paulo and Rio de Janeiro. They are rare and extremely delicate, attaining 20 mm long for 55 chaetigers. The worms are distinctive by their colourful yellow and black pigmentation on the anterior part of body and palps, prominent transverse hood on the dorsal anterior edge of chaetiger 3, and lack of coloured respiratory pigment in blood. Of 12 examined individuals, all were females. Oogenesis is intraovarian; oocytes develop from chaetigers 14–15 to chaetigers 24–36. Recently laid oocytes were about 150 μm in diameter, with embryos and developing larvae found in capsules inside female tubes in March–June. Broods comprised up to 23 capsules with 400 propagules. Capsules were joined to each other in a string and each attached by a single thin stalk to the inner wall of the tube. Larvae hatched at the 4-chaetiger stage and fed on plankton. Pelagic larvae are unique among Pseudopolydora in having large ramified mid-dorsal melanophores from chaetiger 3 onwards. Competent larvae are able to settle and metamorphose at the 15-chaetiger stage, but can remain planktonic up to 18 chaetigers. They have one pair of unpigmented ocelli and three pairs of black eyes in the prostomium, unpaired ramified mid-dorsal melanophores on chaetiger 1 and on the pygidium, ramified lateral melanophores on chaetigers 5–10, prominent yellow chromatophores in the prostomium, peristomium, on dorsal and ventral sides of chaetigers and in the pygidium. Branchiae are present on chaetigers 7–10, and gastrotrochs are arranged on chaetigers 3, 5, 7 and 12. Provisional serrated bristles are present in all notopodia, and hooks are present in neuropodia from chaetiger 8 onwards. Two pairs of provisional protonephridia are present in chaetigers 1 and 2, and adult metanephridia are present from chaetiger 4.