My husband found this tomato hornworm on one of his tomato plants (where else?) and we wondered what all the little white fuzzy things were. After some research (a little bit), we discovered that they are cocoons of a parasitic wasp.
The info below is from About.com
A natural predator of the tomato hornworm is a tiny beneficial insect called the braconid wasp. This wasp lays its eggs inside the hornworm caterpillar where they hatch into larvae that feed on the hornworm’s muscle tissues, while leaving its heart and other essential organs intact until the larvae mature. This largely paralyzes the hornworm, which becomes merely a living fresh food vessel that sustains the wasp larvae. Once the braconid larvae mature, which takes about a week, they then exit through a hole they make in the hornworm’s skin and build a silken cocoon on the outside (as shown in the photograph) within which, like butterflies, they transform into adult braconid wasps that then fly off to infect other tomato hornworms. Different species of braconid wasps parasitize aphids and many other harmful insects.
Of course, those tomato hornworm caterpillars that survive produce the magnificent Sphinx moths, one of our largest and most beautiful geometrids, so completely eradicating them is not entirely desirable for aesthetic reasons, and braconid wasps provide an ecologically sound method of keeping the population of tomato hornworms under control without leading to the complete loss of this wonderful lepidopteran.
Article Contributed by Lloyd Davidson