A new species of the often-cryptic genus Polycheria (Crustacea; Amphipoda) was discovered living in a small specimen of the sponge, Homaxinella erecta (Brøndsted, 1924) (Demospongiae, Suberitida, Suberitidae), in Spirits Bay, on the northern tip of the North Island of New Zealand. Polycheria spongoteras sp. nov. is described using integrative techniques (morphologically, molecularly and ecologically), with discussions on the New Zealand records of the genus and related taxa. The host sponge is redescribed and placed in the Spirits Bay context. [Zooban URL: urn:lsid:zoobank.org:act:FB60B77B-6B98-4102-A41F-D980B03204EB]