Terpios hoshinota is an aggressive, space-competing sponge that kills various stony corals. Outbreaks of this species have led to intense damage to coral reefs in many locations. Here, the first large-scale 16S rRNA gene survey across three oceans revealed that bacteria related to the taxa Prochloron, Endozoicomonas, SAR116, Ruegeria, and unclassified Proteobacteria were prevalent in T. hoshinota. A Prochloron-related bacterium was the most dominant and prevalent cyanobacterium in T. hoshinota. The complete genome of this uncultivated cyanobacterium and pigment analysis demonstrated that it has phycobiliproteins and lacks chlorophyll b, which is inconsistent with the definition of Prochloron. Furthermore, the cyanobacterium was phylogenetically distinct from Prochloron, strongly suggesting that it should be a sister taxon to Prochloron. Therefore, we proposed this symbiotic cyanobacterium as a novel species under the new genus Candidatus Paraprochloron terpiosi. Comparative genomic analyses revealed that 'Paraprochloron' and Prochloron exhibit distinct genomic features and DNA replication machinery. We also characterized the metabolic potentials of 'Paraprochloron terpiosi' in carbon and nitrogen cycling and propose a model for interactions between it and T. hoshinota. This study builds a foundation for the study of the T. hoshinota microbiome and paves the way for better understanding of ecosystems involving this coral-killing sponge.