The putatively ancient subterranean crustacean family Parabathynellidae has been poorly studied, in part because of the problem of obtaining material from difficult to access subterranean habitats in which they live. Further, the systematics of the group has been complicated by their generally simplified morphology and isolated descriptions of new taxa in the absence of any phylogenetic framework. Using material from comprehensive field surveys and mitochondrial cytochrome c oxidase subunit I (COI) and nuclear 18S sequence data, plus morphology, a new genus is recognised, Arkaroolabathynella Abrams & King, gen. nov., from underground waters in the Flinders Ranges, South Australia. Arkaroolabathynella contains four genetically and morphologically distinct species, described as A. bispinosa Abrams & King, sp. nov., A. remkoi Abrams & King, sp. nov., A. robusta Abrams & King, sp. nov. and A. spriggi Abrams & King, sp. nov. Phylogenetic analysis also revealed a previously unknown diversity of parabathynellids from southern Australia, and a complex set of relationships with the eastern (New South Wales) and south-western (Western Australia) continental faunas. Additionally, this study showed that deep molecular divergences in parabathynellids are not always reflected in morphological divergence. A checklist to Australian parabathynellid genera and species is also provided.