Fusichalara pallida sp. nov. is described from decaying wood submerged in a freshwater stream in Taiwan. The phylogenetic relationship of Fusichalara species was sought among representative taxa from related fungal lineages, namely the Chaetosphaeriales and Glomerellalles in the Sordariomycetes, and various other ordinal groups in the Eurotiomycetes, by comparing the concatenated ITS and LSU sequences of their nuc rDNA. The novel Fusichalara species from Taiwan clustered with F. minuta within the Sclerococcales besides other ordinal groups in the Eurotiomycetes. Morphologically, F. pallida is comparable with F. dimorphospora and F. novae-zelandiae in having long-cylindrical first-formed conidia and fusiform subsequent conidia with paler end cells, however, they differ in conidial dimensions. With the addition of this novel taxon, Fusichala now comprises seven species. A synopsis of these species and a composite illustration of their conidial morphology are given to ease identification.