An investigation of a questionable orchid led to the discovery of a new genus and species Thuniopsis cleistogama, endemic to Yunnan province, China. It is characterized by having a subglobose corm, a spike-like (racemose) inflorescence, half opened and spurless flowers, a collar-shaped stigma and subglobose capsules. Based on DNA sequence data from three gene regions (nuclear ribosomal ITS, chloroplast matK and trnL), we investigated its phylogenetic position within the tribe Arethuseae. Phylogenies using maximum likelihood and Bayesian inference support the recognition of Thuniopsis as a distinct genus, and suggest its close relationship to the genera Bletilla, Dilochia, and Thunia. The new genus is circumscribed and a description and illustrations of the new species are provided. The phylogenetic relationships among the genera in Arethuseae are accessed. Moreover, our phylogeny also shed light on the phylogenetic positions of several genera which, to date, remain uncertain.