AbstractPolycephalomyces (Ophiocordycipitaceae) species are found in subtropical regions and are parasitic or hyperparasitic on insects. Two new species, P. aurantiacus and P. marginaliradians, parasitic on Ophiocordyceps barnesii and larva of Cossidae respectively, are introduced in this paper. Morphological comparison with extant species and DNA based phylogenies from analyses of a multigene dataset support the establishment of the new taxa. Polycephalomyces aurantiacus, exhibiting a hyperparasitic lifestyle on Ophiocordyceps barnesii, differs from other species in producing orange conidia in mass and have longer β-phialides in culture. Polycephalomyces marginaliradians differs from other Ophiocordyceps species by producing single stromata with a stipe, smaller perithecia and branched α-phialides and catenate α-conidia and is parasitic on Cossidae. A combined nrSSU, nrLSU, ITS, tef-1a, rpb1 and rpb2 sequence data was analysed phylogenetically including Ophiocordyceps and Polycephalomyces taxa. The new species described herein are clearly distinct from other species in Polycephalomyces. We provide a key to the species of Polycephalomyces and discuss relevant interspecies relationships.