Of the approximately 350 described species of serpulid polychaetes, only Marifugia cavatica inhabits fresh water. It is distributed in ground waters of the Dinaric Karst in North-Eastern Italy, Slovenia, Croatia, and Bosnia and Hercegovina. Five other serpulid species, comprising the genus Ficopomatus, are found in brackish-water locations world-wide; otherwise serpulids are all marine. Here we re-describe M. cavatica and examine fine structure of its chaetae with SEM as well as summarize its distribution. The morphology of Marifugia provided an ambiguous indication of its phylogenetic relationships, and therefore, DNA sequence data was also used. Phylogenetic analysis of nuclear rDNA 18S and 28S sequences using maximum parsimony, maximum likelihood, and Bayesian analysis placed Marifugia as a sister group to a clade of brackish-water Ficopomatus species. Osmoconformity and penetration into non-marine waters hence appears to have taken place once in the evolutionary history of Serpulidae. The transition to a subterranean environment may have occurred via ancestral marine shallow-water to intertidal or estuarine species (like Ficopomatus) that evolved the necessary physiological mechanisms to withstand low salinity and then penetrated into freshwater caves via surface lakes.