Fungal diversity is rapidly expanding, with new species being discovered worldwide. Northern Thailand is considered a hotspot for fungal diversity. In this study, we collected a saprobic microfungus from decaying wood in Chiang Mai Province, Thailand. Morphological examination and phylogenetic analyses of ITS, LSU, and SSU sequences using maximum likelihood and Bayesian inference placed a new isolate within Kirschsteiniothelia. Kirschsteiniothelia chiangmaiensis sp. nov. is characterised by 8-spored, cylindrical-clavate asci with a small ocular chamber and 1-septate ascospores that are ellipsoid to fusiform, with distinct guttules and a smooth wall surrounded by a mucilaginous sheath. Kirschsteiniothelia chiangmaiensis differs from the type by the smaller ascomata, wider asci, and presence of pluri-guttulate, and diverges from K. thujina by smaller ascomata, ascospore, and the presence of mucilaginous sheath. Based on morphology and phylogeny evidence, we introduce K. chiangmaiensis as a new species.