The new species Psilochilus francoae Szlach. & Baranow (Orchidaceae, Triphoreae) is here described from Nariño, Colombia, and compared with its closest relatives. It seems to be related to P. macrophyllus (Lindl.) Ames in having a short-clawed labellum. However, it can be distinguished by the shape of the lateral lobes of the labellum. Psilochilus francoae also resembles P. vallecaucanus Kolan. & Szlach., but the latter species differs by its distinctly long-clawed labellum. In addition, the central part of the labellum of P. francoae is distinctly wider than its middle lobe, whereas in P. vallecaucanus the middle lobe and central part of the labellum are of the same width. Psilochilus francoae differs from the aforementioned species by undulate to undulate-crenulate margins of the labellum which are smooth in both P. macrophyllus and P. vallecaucanus. An illustration of the new species is provided, as well as a key to all Psilochilus Barb. Rodr. species.