Two new Ulvella species, U. elegans R. Nielsen & K. Gunnarsson and U. islandica R. Nielsen & K. Gunnarsson are described. These microfilamentous marine green algae were found in the sublittoral zone in northern Iceland, epiphytic on Euthora cristata and associated with a calcareous polychaete tube, respectively. Unialgal cultures were established from field-collected material for morphological observations. In culture, Ulvella elegans was characterized by rosettes of monostromatic pseudoparenchyma consisting of radiating filaments with a margin of mutually free filaments. Each cell had one pyrenoid. Hairs were not observed. Ulvella islandica had a heterotrichous morphology, consisting of dense tufts of upright broad branches and much narrower, rhizoid-like branches. Acrochaete-type hairs occurred; these are hyaline non-septate merocytic extensions from a more or less bulbous base, which may be separated from the vegetative cell below. Most cells had one pyrenoid except for a few broad cells which had two or three. In a phylogenetic reconstruction based on the chloroplast-encoded tufA gene, the sequences for the two species were clearly distinct from any other Ulvella sequence available for this gene. Ulvella islandica was placed in a clade together with U. lens, U. wittrockii, U. reticulata and U. pseudorepens. Ulvella elegans occupied a branch deep in the phylogeny but the position was poorly supported.