It has long been suggested that endolithic algae inside the skeleton of living corals might have a symbiotic relationship with the coral host and would positively affect coral calcification. However, so far this hypothesis has not yet been further explored. This study investigated the effect of endolithic algae on the growth performance of the cold-water coral Desmophyllum dianthus that is frequently associated with the endolithic chlorophyte Ostreobium queckettii and the cyanobacterium Plectonema terebrans. The fluorescent staining agent calcein was used to document the upward and inward linear growth of septa of specimens of D. dianthus at Fjord Comau, southern Chile. Further qualitative observations concerned skeletal microstructure and density using light field and fluorescence microscopy and x-ray computed tomography, respectively. Since the D. dianthus was sampled in a region displaying strong annual fluctuations of environmental parameters that might influence calcification, growth rates were also tested for a seasonal pattern. The results of this study show a severe reduction of growth rates associated with endolithic algae. Infested individuals grew about half as fast as non-infested polyps referring to both directions of septal growth with median values of 1.18μm/day for upward and 0.49μm/day for inward growth compared to 2.76μm/day and 0.82μm/day, respectively. These results point towards a parasitic relationship between D. dianthus and its endolithic algae refuting the hypothesis of a mutually beneficial association. This theory is further supported by observations on skeletal density and microstructure which suggest a reduction in skeletal density probably caused by extensive tunnelings of both endolithic species. Unlike expected the seasonal variation of upward septal growth rates of D. dianthus was inconsistent with the annual temperature pattern at Fjord Comau. Minimum growth rates were reported in periods of maximum temperatures – a phenomenon that might be explained by the trade-off between growth and reproduction which is suspected to take place in summer. Inward growth rates displayed a continuous decrease with time that is most likely attributed to the increasing influence of morphological constraints towards the center of the polyp. Although this study appears to conclusively indicate a negative effect of the association of D. dianthus with endolithic algae, controversial evidence has been discovered regarding metabolic links between the coral host and the endoliths and further research is necessary to fully resolve the issue.