Collybia, as understood by Antonin & Noordeloos, comprises four species: C. racemosa, C. tuberosa, C. cirrhata and C. cookei. Collybia tuberosa, C. cirrhata and C. cookei are morphologically similar and are primarily distinguished from each other by the presence or absence and the colour of sclerotia. All four share a common and unique habitat. Phylogenetic reconstructions using DNA sequences of the ribosomal ITS1–5.8S–ITS2 support four distinct clades, each corresponding to a morphological species, with the C. tuberosa, C. cirrhata and C. cookei clades forming a larger group. Analyses of ribosomal Large Subunit DNA sequences confirmed that Collybia tuberosa, C. cirrhata and C. cookei formed a monophyletic group. In both analyses, the C. racemosa sequence was highly divergent from those of the other three species of the complex and we propose a separate genus name, Dendrocollybia, for this species. Simple diagnostic RFLP patterns were identified for the four species and were used to validate morphological designations and distributions.