Zelounies estrambordi gen. nov. sp. nov. is a small stoloniferous thecate hydroid discovered in the coral reefs of La Réunion Island (Indian Ocean). In culture it released hydranths that were able to lead a free pelagic life before settling to develop a new benthic colony. The process passes through the following stages; l) modification and broadening of the base of the hydranth, 2) detachment autotomy of the hydranth, 3) pelagic life, 4) settlement and attachment at the aboral end by epidermal secretions, 5) contraction of the hydranth, 6) expulsion of waste products, 7) disaggregation of oral end of the hydranth including the loss of tentacles and hypostome, 8) development into an adherent spherule, 9) growth of a hydrorhiza, 10) growth of a small hydranth, the first of the new colony. Stages 4 to 10 take about four days. The autotomy of hydranths, an unusual method of asexual reproduction and dispersal in thecate hydroids, is compared to that of athecates where the behaviour is more common. Implications concerning the biology and ecology of Z. estrarnbordi are discussed. Observations on feeding and other behaviour are given, including the production of hydrorhizal propagules from fragments of the hydrorhiza of colonies kept in unsuitable conditions.