The murine rodent genus Microhydromys Tate and Archbold, 1941, includes the smallest of the native rodents of New Guinea and is the rarest Australo-Papuan rodent genus preserved in world museums. We discuss the morphological characteristics of Microhydromys and diagnose two species in the genus: M. richardsoni Tate and Archbold, 1941, distributed over northern New Guinea, and M. argenteus, n. sp., recorded from three localities in southern New Guinea. The only other species previously classified in the genus—Microhydromys musseri Flannery, 1989—is re-allocated to the genus Pseudohydromys Rümmler, 1934. The little available information relating to their biology indicates the species of Microhydromys to be terrestrial inhabitants of foothill and lower montane forest formations and probably naturally rare in those environments.