About a century after the first finding in northern Vietnam (1908), Coprinus leucostictus is rediscovered on 12 localities in southern India and southern to southeastern China, growing in evergreen subtropical or tropical forests. It is morphologically a rather unique species with coprinoid basidiomata, strongly branched and diverticulate veil hyphae, and a hymeniderm pileipellis. The BLAST search of ITS and tef-1α sequences showed its close relationship to Hausknechtia floriformis, which is not clear based on morphological characters. Multigene phylogenetic analysis of a concatenated dataset of ITS, LSU, tef-1α, and β-tubulin sequences, revealed C. leucostictus and H. floriformis as separate, but sister species. Molecular phylogenetic relationships within the family Psathyrellaceae (including 17 genera) are presented in the phylogram. The genera Hausknechtia and Candolleomyces formed two well-supported lineages and were recovered as a monophyletic group. A total of 27 sequences from the genus Hausknechtia were newly generated in this study. Coprinus leucostictus is combined as Hausknechtia leucosticta, its epitype is designated, and the hitherto monotypic genus Hausknechtia is emended. A detailed morphological description of H. leucosticta supplemented with colour photographs and line drawings is provided.