Since the discovery of the Pleurocordyceps/ ‘Polycephalomyces’ clade unaffiliated with the clades of Clavicipitaceae s. str., Ophiocordycipitaceae and Cordycipitaceae of clavicipitaceous fungi, a number of taxa have been published subsequently and more fungal material relevant to the group have become available for further study. Here, a multi-gene phylogeny using nrSSU, nrLSU, tef1, rpb1, and rpb2 was constructed with some of the recently discovered additional taxa by ML and Bayesian analyses to test and refine the current phylogenetic framework for Cordyceps s. lat. and other clavicipitaceous fungi. In addition to the well-supported major Pleurocordyceps/ ‘Polycephalomyces’ clade revealed previously, another clade with newly added taxa referred to as ‘Polycephalomyces formosus-like’ from Japan was found to be sister to the Pleurocordyceps/ ‘Polycephalomyces’ clade. Extensive investigation revealed that strains named ‘Polycephalomyces formosus-like’ grouped in this new clade and do indeed represent the true Polycephalomyces formosus and that species previously included in the genus Polycephalomyces require a new generic name. Based on the phylogenetic analyses and morphological characteristics, including available both sexual and asexual morphs when available, the new generic name Pleurocordyceps is introduced and relevant new combinations are made. A newly designated lectotype and a supporting epitype for Polycephalomyces formosus is selected and the circumscription of Polycephalomyces is discussed.