This study introduces a novel holomorphic marine fungal species, Halobyssothecium estuariae (Lentitheciaceae, Pleosporales), from dead Phragmites communis. The new species has semi-immersed, subglobose or ellipsoidal, papillate, conical ascomata, clavate to subcylindrical, short pedicellate asci and 3-septate, fusoid to ellipsoidal ascospores with rounded ends, pale brown to dark brown central cells and hyaline end cells. The asexual morph has multiseptate, filiform, intercalary, catenate, branched chlamydospores that resemble Xylomyces. The asexual morph of Keissleriella phragmiticola based on combined LSU, SSU, ITS and TEF1 sequence analyses is reported. The role of molecular identification in delineating cryptic species are also discussed.