During an investigation into lignicolous freshwater fungi from the plateau lakes in Yunnan Province, China, two fresh collections of Torula taxa were collected and examined morpholgically. Torula luguhuensis is characterised by: conidiophores which are semi-macronematous mononematous, erect, septate, smooth, slightly flexuous and pale brown; conidiogenous cells which are holoblastic, mono- to polyblastic, integrated, terminal, terminal or intercalary in conidial chains, doliiform and pale brown; conidia which are branched chains, acrogenous, straight or slightly curved, dark brown to blackish, pale brown or subhyaline at apex, 1–3 septate, strongly constricted at the septa, verruculose or finely echinulate and rounded at both ends. A new species was introduced, based on morphological and phylogenetic analysis of combined ITS, LSU, RPB2 and TEF sequence data. Detailed descriptions and illustrations are provided, with an updated phylogenetic tree depicting intergeneric relationships within the Torulaceae.