Freshwater fungi are highly diverse and ecologically important in freshwater systems. In China, more than 1000 species of freshwater fungi are known. Here, we present a brown-spored hyphomycetes that was collected on a submerged decaying bamboo culm in a forest stream in China. Phylogenetic analyses of combined LSU, ITS and TUB2 sequences confirm the placement of our new strain in Veronaea (Herpotrichiellaceae), sister to V. japonica. Veronaea aquatica sp. nov. differs from related taxa V. compacta and V. japonica in having longer conidiophores and cylindrical to pyriform or subclavate conidia with 0–2 septa. Veronaea aquatica also has darker brown hyphae compared to V. japonica. A morphological description and detailed illustrations of V. aquatica are provided.