A high morbidity, high mortality disease process caused flock deaths in an Indian ringneck parrot (Psittacula krameri) aviary flock in Victoria, Australia. Affected birds were either found dead with no prior signs of illness, or showed clinical evidence of respiratory tract disease, with snicking, sneezing and dyspnoea present in affected birds. Necropsy examinations performed on representative birds, followed by cytological and histopathological examination, demonstrated lesions consistent with a herpesvirus bronchointerstitial pneumonia. Transmission electron microscopy analysis of lung tissue demonstrated typical herpesvirus virions measuring approximately 220 nm in diameter. Next generation sequencing of genomic DNA from lung tissue revealed a highly divergent novel Psittacid alphaherpesvirus of the genus Iltovirus. Iltoviruses have been previously reported to cause respiratory disease in a variety of avian species, but molecular characterisation of the viruses implicated has been lacking. This study presents the genome sequence of a novel avian herpesvirus species designated Psittacid alphaherpesvirus-5 (PsHV-5), providing an insight into the evolutionary relationships of the alphaherpesviruses.