Summary: Disease in ecological systems plays an important role. In the present investigation we propose and analyze a predator-prey mathematical model in which both species are affected by infectious disease. The parasite is transmitted directly (by contact) within the prey population and indirectly (by consumption of infected prey) within the predator population. We derive biologically feasible and insightful quantities in terms of ecological as well as epidemiological reproduction numbers that allow us to describe the dynamics of the proposed system. Our observations indicate that predator-prey system is stable without disease but high infection rate drive the predator population toward extinction. We also observe that predation of vulnerable infected prey makes the disease to eradicate into the community composition of the model system. Local stability analysis of the interior equilibrium point near the disease-free equilibrium point is worked out. To study the global dynamics of the system, numerical simulations are performed. Our simulation results show that for higher values of the force of infection in the prey population the predator population goes to extinction. Our numerical analysis reveals that predation rates specially on susceptible prey population and recovery of infective predator play crucial role for preventing the extinction of the susceptible predator and disease propagation.