A novel liquid crystalline phase has been identified in the kappa-carrageenan/NaI/water system. Solutions of ultrasonically degraded carrageenan were prepared in 0.1 III NaI both by direct mixing and by osmotic compression, and a macroscopic phase separation into one anisotropic bottom phase and one isotropic top phase was found in the concentration range 5-11% (w/w). The properties of the anisotropic phase were investigated by small-angle X-ray scattering (SAXS), Na-23 NMR, and polarized light microscopy. The phase could be melted to a completely isotropic solution by heating to 65 degrees C, and the anisotropic phase slowly re-formed again on standing at room temperature, indicating that the phase is in thermodynamic equilibrium. Intact(nondegraded) kappa-carrageenan failed to give macroscopic phase separation but yielded instead birefringent gels for concentrations higher than 2%.