Austrosignum fuegiae, a new species, is fully described on the basis of specimens collected in the shallow waters of the Beagle Channel. The genus Austrosignum Hodgson, 1910 is in need of revision, and the inclusion of A. fuegiae in this genus should be considered provisional. Austrosignum fuegiae is most similar to A. dentatum Winkler, 1994, which was previously known from the Magellan Strait and is herein recorded for the Beagle Channel for the first time. These two species have a head with bilobed frontal margin, short eyestalks, and mandibles with palps, a group of characters that is not shared by the type species of the genus, A. grande Hodgson, 1910.