Cyanolophocolea echinella R.M.Schust. is an intriguing species, possessing some character states characteristic of the genus Chiloscyphus, such as the ability to produce both male and female gametangia on leading shoots, while having other features that are generic characters of Heteroscyphus, namely presence of gametangia on short, abbreviated lateral-intercalary branches. Its systematic identity was here studied using morphological and DNA sequence data of the chloroplast gene regions of rbcL, rps4 and trnL-F. Thirty-seven exemplars including eight of Cyanolophocolea echinella, 27 of Lophocoleaceae and two of Plagiochilaceae were used for phylogenetic reconstruction using both maximum parsimony and Bayesian inference methods. Our analyses placed Cyanolophocolea echinella within Heteroscyphus with strong support. Heteroscyphus echinellus (Lindenb. & Gottsche) J.J.Engel & XiaoL.He is proposed and based on morphological variations two varieties, var. echinellus and var. hyalinus J.J.Engel, are recognized. A large indel (59 base pairs) and one substitution in the trnL intron region, and also one substitution in the intergenic spacer region were found in the trnL-F in two Cyanolophocolea echinella exemplars both with hyaline oil-bodies. This indicates rapid molecular evolution might have occurred within the species.