Formalin used for fish and egg treatments at hatcheries often develops a white precipitate called paraformaldehyde when stored at low temperatures. This presents a problem for hatchery managers because most of the literature and treatment procedures claim that formalin containing paraformaldehyde is more toxic than pure formalin and is not safe for fish or egg treatments. Acute toxicity tests with rainbow trout (Oncorhynchus mykiss) and channel catfish (Ictalurus punctatus) showed that the toxicity of formalin solutions containing a moderate amount of fine paraformaldehyde was similar to that of pure formalin. In efficacy tests on fish eggs, the bottom fraction of a formalin solution containing paraformaldehyde and a sample from the clear top fraction were equally effective in controlling fungal infection on rainbow trout eggs and caused no treatment-related mortality. Chemical assays found on average a 3% difference in formaldehyde concentration between top and bottom fractions of a formalin solution containing paraformaldehyde. We recommend normal use of formalin solutions containing light to moderate amounts of fine paraformaldehyde. Allowing solutions to warm to room temperature may resolubilize moderate amounts of paraformaldehyde if the exposure to cold was not prolonged. If precipitation is heavier, clear top fractions can be decanted and used as normal because paraformaldehyde settles to the bottom of containers. Formalin solutions that have been exposed to freezing temperatures for long periods (more than 6 weeks) and have developed large amounts of paraformaldehyde solids should not be used and resolubilization by warming is not possible. Formation of paraformaldehyde in formalin solutions can be easily avoided by storing formalin at room temperature.