A yellow fuzzy caterpillar with spikes is a caterpillar of the American Dagger Moth. At an early stage of development, this caterpillar is a bright yellow color, but as it ages, it becomes paler and finally turns white.
This type of caterpillar has four black spikes on its back. It is usually found in the forest. Over the winter, these caterpillars develop inside of the cocoon, and at the beginning of summer, they emerge as large brown moths. These caterpillars may cause allergic reactions, as they carry a certain type of venom on their coats that acts as a defense system.