Parasites play pivotal roles in structuring communities, often via indirect interactions with non-host species. These effects can be density-mediated (through mortality) or trait-mediated (behavioural, physiological and developmental), and may be crucial to population interactions, including biological invasions. For instance, parasitism can alter intraguild predation (IGP) between native and invasive crustaceans, reversing invasion outcomes. Here, we use mathematical models to examine how parasite-induced trait changes influence the population dynamics of hosts that interact via IGP. We show that trait-mediated indirect interactions impart keystone effects, promoting or inhibiting host coexistence. Parasites can thus have strong ecological impacts, even if they have negligible virulence, underscoring the need to consider trait-mediated effects when predicting effects of parasites on community structure in general and biological invasions in particular.