Cyptotrama was divided into several sections, of which sect. Xerulina was often treated as a separate genus by some mycologists. In this study, collections of Cyptotrama from East Asia, Southeast Asia, and South Asia were studied. For comparison, materials from North America and New Zealand were analysed. Our multi-gene phylogenetic analyses indicated that Cyptotrama is monophyletic and Xerulina should be treated as a section within the genus Cyptotrama. Different scenarios of morphological character evolution in Cyptotrama are discovered. A total of seven species of Cyptotrama can be recognized from Asia, three of which, Cyptotrama angustispora, C. glabra, and C. shennongjia, are new to science. Meanwhile, three taxa previously placed in Xerulina or Marasmius were proved to be members of Cyptotrama, and the new combinations, namely Cyptotrama trogioides, C. megaspora, and C. myochroa, are accordingly proposed. A key for the diagnosis of worldwide Cyptotrama species is provided.