Canalisporium variabile sp. nov. is described and illustrated based on several specimens from submerged wood and decaying palm rachis in Australia. It is most similar to C. pallidum in having pale conidia with clearly visible septa and canals, but they are two distinct species. In C. pallidum, conidia are more stable in shape, size and septation, with mostly a single column of vertical septa. In C. variabile, however, conidia are more variable in morphology, with mostly two columns of vertical septa, and the cells are more constricted. Conidia of C. pallidum are generally longer and more slender than those of C. variabile, which are generally shorter and broader. Canalisporium variabile is also compared with C. pulchrum and C. kenyense.