In an investigation of Peltigera species in montane forests of northern China, a new species, P. isidiophora was identified based on morphological characteristics and DNA sequence data. It differs morphologically from other members of the P. canina-group by its laminal clustered isidia occurring in pits, shiny upper surface, and its slender, scattered and simple rhizines. It also differs chemically from morphologically similar species by two unnamed terpenoid metabolites detected by thin layer chromatography in solvent systems C and G. Comparisons of the ITS sequences, both in phylogenetic analysis and secondary structure models of ITS2, support the taxonomic distinctiveness of this species. A synoptic table to morphologically similar species, and a key to the species in the Peltigera canina group from China are provided.