Abstract Lepidolejeunea is a largely epiphytic, pantropical genus of leafy liverworts. While the phylogenetic position of Lepidolejeunea has been the subject of recent molecular investigations, the relationships within this genus have been little studied. We employed sequences of two chloroplast regions (trnL–trnF, rbcL) and the nuclear ribosomal ITS region from 32 accessions of Lepidolejeunea to reconstruct its phylogeny. Two accessions of Rectolejeunea were used as outgroup. Maximum parsimony and likelihood analyses indicate that the diversity of Lepidolejeunea is underestimated by current morphological classification, and that Lepidolejeunea involuta consists of two independent entities, Lepidolejeunea involuta s.str. and Lepidolejeunea cuspidata comb. nov. Despite being treated as synonymous in earlier studies, both species nest in different main clades of Lepidolejeunea. Lepidolejeunea involuta belongs to L. subg. Kingiolejeunea which includes species with ocelli of the same size as the surrounding leaf cells. Lepidolejeunea cuspidata instead belongs to the recircumscribed L. subg. Perilejeunea which includes species having ocelli of at least partly smaller size than the surrounding leaf cells. Lepidolejeunea auriculata is introduced as a new species based on molecular and morphological evidence. Our results highlight the need for integrative taxonomic studies to clarify the status of many binomials within Lejeuneaceae. They also suggest that as integrative approaches are applied across liverworts estimates of global diversity will be revised upwards.