Brown band syndrome is a new coral affliction characterized by a local accumulation of yet-unidentified ciliates migrating as a band along the branches of coral colonies. In the current study, morphologically intact zooxanthellae (= Symbiodinium) were observed in great numbers inside the ciliates (>50 dinoflagellates per ciliate). Microscale oxygen measurements and variable chlorophyll a fluorescence analysis along with microscopic observations demonstrated that zooxanthellae within the ciliates are photosynthetically competent and do not become compromised during the progression of the brown band zone. Zooxanthellae showed similar trends in light acclimation in a comparison of rapid light curve and steady-state light curve measures of variable chlorophyll a fluorescence. Extended light exposure of steady-state light curves resulted in higher quantum yields of photosystem II. The brown band tissue exhibited higher photosynthetically active radiation absorptivity, indicating more efficient light absorption due to a higher density of zooxanthellae in the ciliate-dominated zone. This caused relatively higher gross photosynthesis rates in the zone with zooxanthella-containing ciliates compared to healthy coral tissue. The observation of photosynthetically active intracellular zooxanthellae in the ciliates suggests that the latter can benefit from photosynthates produced by ingested zooxanthellae and from photosynthetic oxygen production that alleviates diffusion limitation of oxic respiration in the densely populated brown band tissue. It remains to be shown whether the zooxanthellae form a stable symbiotic association with the ciliate or are engulfed incidentally during grazing on coral tissue and then maintained as active inside the ciliate for a period before being digested and replaced by new zooxanthellae.