A new species of the genus Hymenagaricus (Agaricaceae) collected from Taiwan, H. taiwanensis, is described and illustrated with line drawings. It is characterized by the yellow-brown pileus covered with fuscous black squamules, the white membranous annulus, ellipsoid basidiospores, and the pseudoparenchymatous elements in the pileal squamules which are often encrusted with brownish pigments. The analyses of internal transcribed spacer and large subunit of nuclear ribosomal DNA sequences suggest that Hymenagaricus has a close relationship with Micropsalliota and Allopsalliota (Agaricus clade) in the tribe Agariceae, and represents an independent line of evolution.