A new species of freshwater red algae, Sheathia jinchengensis, is described based on material collected from rocks in a clean and cold-water stream from the Jincheng region of Shanxi province in North China. Molecular sequences of rbcL and psbA genes were used to evaluate the phylogenetic relationship among samples of S. jinchengensis and other Sheathia species from several regions of the world. The results showed that S. jinchengensis formed an independent branch and separated from the previously published sequence data of other Sheathia taxa. From a morphological point of view, this new species differs also from other species of the genus by the smaller diameter of whorls (167.0–312.5 μm) and larger carpogonium diameter (17.0–29.0 μm). Comparison of sequence variation and thallus morphology with other Sheathia taxa resulted in the proposal of the new species—S. jinchengensis. Additionally, two endemic Batrachospermum species described earlier from China i.e., B. hongdongense and B. longipedicellata are now transferred to the genus Sheathia based on the present study as S. hongdongensis (S.L.Xie & J.Feng) Han, Nan, Feng, Lv, Liu, Kociolek et Xie comb. nov. and S. longipedicellata (Hua & Shi) Han, Nan, Feng, Lv, Liu, Kociolek et Xie comb. nov.