A multi-gene (psbA, rbcL, 18S rDNA) molecular phylogeny of the genus Phymatolithon showed a polyphyletic grouping of two monophyletic clades within the Hapalidiales. DNA sequence data integrated with morpho-anatomical comparisons of type material and of recently collected specimens were used to establish Phymatolithopsis gen. nov. with three species, P. prolixa comb. nov., the generitype, P. repanda comb. nov. and P. donghaensis sp. nov. Phymatolithopsis is sister to Mesophyllum and occurs in a clade distinct from Phymatolithon and boreal species currently assigned to Lithothamnion. Morpho-anatomically, Phymatolithopsis is comprised of species that are non-geniculate and encrusting, bear epithallial cells with rounded walls (not flared), subepithallial initials that are usually as short as or shorter than their immediate inward derivatives, conceptacle primordia from all stages forming superficially directly from subepithallial initials, mature carposporangial conceptacles with a discontinuous fusion cell, gonimoblast filaments that develop at the margins of the fusion cell around the periphery of the carposporangial conceptacle chambers, and multiporate tetra/bisporangial conceptacles. Phymatolithopsis can be distinguished from Phymatolithon by the origin of its conceptacle primordia which are initiated superficially, directly from the layer of subepithallial initials below the epithallial cells and the distribution of gonimoblast filaments in carposporangial conceptacles, that are at the margins of the fusion cells.