Halichondria panicea has two different seasonal colours, green and yellow, which may reflect the effect of temperature on the abundance of green microalgal species. There is, however, no definitive identification of the strain responsible for the colour change. This question was addressed by metagenomic analysis of the 16S and 18S rRNA V4 regions and comparison of chlorophyll fluorescence of the two colour morphs by epifluorescence microscopy. H. panicea samples were collected for analysis in four seasons in 2022 along the Northumberland coast, North East England. The chlorophyll concentration in green sponges was higher than in yellow sponges. Moreover, the bacterial and cyanobacterial abundance, diversity, and predicted bacterial functions were significantly higher in the green morph. The eukaryotic community in green sponges contained an abundance of specific green microalgal genera and higher eukaryotic abundance. Interestingly, yellow sponges had a higher abundance of golden-brown dinoflagellates known as the Dino-Group-I-Clade-I genus. These dinoflagellates exhibit parasitic behaviour in marine organisms. It is suggested, therefore, that the yellow colour is a sign of a diseased H. panicea rather than a seasonal colour morph. A comprehensive analysis of 16S and 18S rRNA sequences from sponge samples and their predicted functions provided a deeper understanding of sponge colour variations.