A 'sibling' species of the model organism Caenorhabditis elegans has long been sought for use in comparative analyses that would enable deep evolutionary interpretations of biological phenomena. Here, we describe the first sibling species of C. elegans, C. inopinata n. sp., isolated from fig syconia in Okinawa, Japan. We investigate the morphology, developmental processes and behaviour of C. inopinata, which differ significantly from those of C. elegans. The 123-Mb C. inopinata genome was sequenced and assembled into six nuclear chromosomes, allowing delineation of Caenorhabditis genome evolution and revealing unique characteristics, such as highly expanded transposable elements that might have contributed to the genome evolution of C. inopinata. In addition, C. inopinata exhibits massive gene losses in chemoreceptor gene families, which could be correlated with its limited habitat area. We have developed genetic and molecular techniques for C. inopinata; thus C. inopinata provides an exciting new platform for comparative evolutionary studies.