A new species of Pseudocentrum, P. kayi, is described and illustrated. Populations of this taxon were found in the Andes of Peru and Ecuador. The newly described species is unique in the genus by having a pendent, massive spur. It is distinguished from P. bursarium Rchb. f. by the form of floral bracts, dorsal sepal, and lip. Differences in the lip form between P. kayi and similar taxa are illustrated. Information about the habitat, ecology, and distribution of the new entity, as well as a brief discussion of closely related species, are supplied. A key to identification of all known Pseudocentrum species is provided. Pseudocentrum sect. Bursariae is proposed. Notes on P. lehmannii found in Reichenbach's herbarium are presented together with its illustration.