Two new species of Fusarium associated with Australian indigenous grasses in natural ecosystems are described as F. lyarnte and F. werrikimbe on the basis of morphology, DNA fingerprinting and phylogenetic analysis of EF-1α and β-tubulin sequence data. Isolates of these species were initially recovered from soil in the McGraths Creek area of central Australia and subsequently recovered from soil and stems of the indigenous grass Sorghum interjectum from Litchfield National Park in the Northern Territory, and from Sorghum leiocladum from Werrikimbe National Park in New South Wales. The common feature of both of these species is the production of large globose microconidia in false heads on polyphialides. Attempts to apply the biological species concept were unsuccessful.