The trade-off hypothesis for the evolution of virulence predicts that parasite transmission stage production and host exploitation are balanced such that lifetime transmission success (LTS) is maximised. However, the experimental evidence for this prediction is weak, mainly because LTS, which indicates parasite fitness, has been difficult to measure. For castrating parasites, this simple model has been modified to take into account that parasites convert host reproductive resources into transmission stages. Parasites that kill the host too early will hardly benefit from these resources, while postponing the killing of the host results in diminished returns. As predicted from optimality models, a parasite inducing castration should therefore castrate early, but show intermediate levels of virulence, where virulence is measured as time to host killing. We studied virulence in an experimental system where a bacterial parasite castrates its host and produces spores that are not released until after host death. This permits estimating the LTS of the parasite, which can then be related to its virulence. We exposed replicate individual Daphnia magna (Crustacea) of one host clone to the same amount of bacterial spores and followed individuals until their death. We found that the parasite shows strong variation in the time to kill its host and that transmission stage production peaks at an intermediate level of virulence. A further experiment tested for the genetic basis of variation in virulence by comparing survival curves of daphniids infected with parasite spores obtained from early killing versus late killing infections. Hosts infected with early killer spores had a significantly higher death rate as compared to those infected with late killers, indicating that variation in time to death was at least in part caused by genetic differences among parasites. We speculate that the clear peak in lifetime reproductive success at intermediate killing times may be caused by the exceptionally strong physiological trade-off between host and parasite reproduction. This is the first experimental study to demonstrate that the production of propagules is highest at intermediate levels of virulence and that parasite genetic variability is available to drive the evolution of virulence in this system.