This study describes Apseudopsis formosus sp. nov., a new apseudomorph tanaidacean species from the Ria Formosa lagoon (southern Portugal). Species description was based on 223 individuals (22 juveniles, 60 males and 141 females), comprising diverse developmental stages (juveniles II, males I and II, preparatory, copulatory and intermediate females). The total length of the studied population ranged from 2.2 to 3.0 mm in juveniles, 2.5 to 4.8 mm in males and 2.9 to 4.9 mm in females. Overall, Apseudopsis formosus sp. nov. differs from congeneric tanaidaceans from the Atlantic Ocean and Mediterranean Sea by the presence of combined different morphological characters such as short pointed rostrum, posterolateral pointed corners on pereonites 2–6, hyposphenium only on pereonite 6, antennular outer flagellum 7- to 10-segmented, inner flagellum 3-segmented and five spines on propodus of pereopod 1, and sexual dimorphism evidenced by a pronounced mid-dorsal triangular wing-shaped protuberance on male merus cheliped, unique in Apseudopsis genus. At each studied developmental stage, some individuals presented abnormalities in spination, having only four spines in one of the propodus of pereopod 1. Additionally, five first records of Apseudopsis from the Algarve coast (A. adami, A. bacescui, A. elisae, A. mediterraneus and A. uncidigitatus) are reported for Portuguese waters. A biogeographic overview of the genus Apseudopsis is presented through the compilation and mapping of all worldwide reported occurrences. Passive dispersion can explain the most recent species distribution, yet not disregarding that the study area is taxonomically understudied. This study contributes to improve the current knowledge on tanaidacean taxonomy and updates the geographical distribution range of the Apseudopsis–complex.