We describe and illustrate Paepalanthus fabianeae, a new species of Eriocaulaceae from the central portion of the Espinhaço Range in Minas Gerais, Brazil. Previous phylogenetic evidence based on analyses of nuclear (ITS and ETS) and plastid (trnL-trnF and psba-trnH) sequences revealed P. fabianeae as belonging to a strongly supported and morphologically coherent clade containing five other species, all of them microendemic, restricted to the Espinhaço range. Due to the infrageneric classification of Paepalanthus being highly artificial, we preferred not assigning P. fabianeae to any infrageneric group. Paepalanthus fabianeae is known from two populations growing in campos rupestres (highland rocky fields) in the meridional Espinhaço Range. The species is characterized by pseudodichotomously branched stems, small, linear, recurved, and reflexed leaves, urceolate capitula, and bifid stigmas. Illustrations, photos, the phylogenetic position, and a detailed description, as well as comments on habitat, morphology, and affinities with similar species are provided. The restricted area of occurrence allied with threats to the quality of the habitat, mainly due to quartzite mining, justifies the preliminary classification of the new species in the Critically Endangered (CR) category using the guidelines and criteria of the IUCN Red List.