The development of Lactarius lactarius larvae is described based on three relatively poorly preserved specimens, 6 to 23 mm SL. Aspects of adult external morphology and osteology relevant to assessing the relationships of this taxon are also described. Larvae are notable for their limited head spination, large swim bladder and unusual pigmentation. They otherwise resemble carangids. Lactarius possess numerous adult autapomorphies. Previous suggestions that Lactarius is a member of the Sciaenidae, Scombridae or Serranidae are rejected. The conventional placement of Lactarius near the carangoid fishes cannot be rejected. A number of larval and adult characters indicate that Lactarius and Mene are the second and first sister groups, respectively, of the carangoid fishes sensu Smith-Vaniz and Johnson. However, none of these characters are unequivocal, and the relationships of Lactarius remain uncertain pending availability of larvae of the carangoid Nematistius and more larvae of Lactarius.