That's one of the many hornworm caterpillars, probably a Rustic Sphinx moth caterpillar, as they are known to feed on gardenias.

The little white things are the 'cocoons' of tiny Braconid parasitic wasps. The adults wasp lays her eggs under the skin of caterpillars; the eggs hatch inside and teeny larvae begin feeding on the innards of the larger insect, evenually killing it.

When the wasp larvae are ready to pupate, they emerge from the surface, create that little cocoon, and will eventually exit as a fully developed adult parasitoid. Thus, inside those cocoons, unless they have already been vacated, are the pupating wasps!

Braconids are considered a very important part of natural control of caterpillars and any that you find in that conditions should be allowed to remain on the host plant so that the population of the braconids always increase.

There is usually no need to do anything to control hornworms unless you are totally out numbered. There are tomato and tobacco hornworms that make pests of themselves on our tomatoes, peppers, and eggplants....but even so, I've found that hand removal is the most efficient, effective, and prompt means of control. In general, most hornworms are considered a very minor pest.

Thanks so much rhizo 1. I have to admit I was rather grossed out by it. But your description of the wasps eating the caterpillar from inside makes me almost feel sorry for the poor thing!

Pretty gruesome, I know. But tiny parasitic wasps of several species perform that invaluable service for us in our gardens, forests, orchards, and farms helping to control caterpillars, aphids, scale insects, and other pests.

With the many insect issues I have here - aphids, whiteflies, spider mites - I will be sure to leave the caterpillar alone if I come across another one. Thanks again Rhizo!