Although the Australasian grass genus Austrostipa is species rich, abundant and ecologically significant, the subgeneric classification of its 62 species has not been comprehensively tested with molecular data. We used three molecular markers from 51 species to determine a phylogeny of the genus and found strong support for the following seven of the existing subgenera: Falcatae, Austrostipa, Aulax, Lobatae, Bambusina, Lancea and Longiaristatae. The molecular data do not support Tuberculatae and Eremophilae, which could be combined with subgenus Austrostipa. The data are equivocal or insufficient regarding monophyly of Ceres, Arbuscula, Petaurista and Lanterna. Data from the nuclear internal transcribed spacer region appear to be suitable for phylogenetic analysis of this group, and the degree of sequence variability resolves species-level relationships with good levels of support. In contrast, chloroplast sequence data from the matK and rbcL genes do not resolve most relationships at the species level, and the inferred phylogeny hints at gene duplication, chloroplast capture, or deep coalescence in the evolutionary history of Austrostipa.