A new species of Ascobotryozyma, A. cognata sp. nov. (anamorph Botryozyma cognata), was isolated from beetle galleries in Idaho, USA. A. cognata was found on the surface of free-living nematodes, Panagrellus dubius, collected from galleries created by the long-horned beetle Saperda calcarata in Populus (aspen), and the weevil Cryptorhynchus lapathi in Salix (willow). A. cognata isolates were collected from similar habits and in relatively close proximity to those of A. americana, the only species described from North America. The recognition of A. cognata as a distinct species was supported by morphological and molecular data. Thallus cells of A. cognata were significantly shorter than those of A. americana. Low DNA reassociation values, notably different randomly amplified polymorphic DNA (RAPD), inter-sequence simple repeat (ISSR), and amplified fragment-length polymorphic (AFLP) fingerprints, and sequence divergence in both the D1/D2 domain of the nuc-LSU rDNA and an additional unidentified region were all consistent with the recognition of a new species.