The fly, Philornis downsi Dodge & Aitken, was first collected in 1964 on the Galápagos Islands and is now widespread across the archipelago. Virtually nothing is known about the behaviour and ecology of the fly as well as for the genus in general. Here, we describe all larval instars for the first time, and discuss infection intensity and impacts of parasitism on nestling survival of Darwin's finches. Adult P. downsi are non-parasitic free-living flies, whereas the larvae are obligate blood-feeding parasites on nestling birds. The larvae show a marked shift in their host site specificity – a novel finding for the genus Philornis: the first and early second larval instars live as agents of myiasis in finch nostrils and other tissues, while the older second and third instar larvae reside in the nest material and feed externally on the blood of nestlings, leading to blood losses in nestlings of 18–55%. Pupation occurs in the bottom layer of the nest. The combined effects of tissue damage by the endoparasitic instar larvae and anaemia by nest-dwelling haematophagous instar larvae account for the high nestling mortality (76%) due to Philornis parasitism. This represents the highest mortality by Philornis reported in the literature and emphasizes the extremely serious threat this parasite poses for the endemic passerine fauna of the Galápagos Islands.