The Chinese grass shrimp (Palaemonetes sinensis) was found with a white turbidity appearance in the Panjin area. After dissection, typical symptoms of milky disease with hemolymph emulsification and noncoagulation were observed; however, the pathogen was unknown. In this study, we aimed to isolate the pathogen of the diseased P. sinensis. We found that the pathogen could grow on the fungal medium Bengal red, and microscopic examination showed that it reproduced by budding. Molecular identification of the isolated and purified yeast strain LNMB2021 based on 26S rDNA sequence showed that the pathogenic pathogen was Metschnikowia bicuspidata (GenBank OK094821), with 98.74% homology with M. bicuspidata strain LNES0119 (GenBank OK073903) and 98.56% with M. bicuspidata strain Liao (GenBank MT856369). The results of an artificial infection test showed that M. bicuspidata caused the same clinical symptoms in P. sinensis, and the isolated pathogen was still the same, which proved that P. sinensis was a new host of M. bicuspidata. Histopathological analysis showed that there were obvious pathological changes in the hepatopancreas and muscle tissue of the diseased P. sinensis. Identification of the pathogen is essential for the prevention and control of the disease and the healthy culture of P. sinensis. Furthermore, considering the transmissibility and cross-host transmission of M. bicuspidata, its risk of infecting other aquatic animals deserves high attention.