Phialocephala urceolata sp. nov. was isolated from a black film that had developed on a water-soluble proprietary heparin solution (pH 2.5). Morphological and enzymatic characters, along with phylogenetic analyses of rDNA sequence data, indicated that the conidial fungus is closely related to species of Phialocephala known primarily as endophytes in the roots of vascular plants (e.g. Acephala applanata, P. fortinii and P. sphaeroides) or as associates of persistent plant organs such as the stems and needles of woody plants (e.g. P. compacta, P. dimorphospora and P. scopiformis). Phialocephala urceolata is distinctive in having urn-shaped phialides that are sparsely distributed along the conidiophore axis, a slow growth rate in culture and in exhibiting a unique combination of reactions on enzymatic test media (i.e. it acidifies casamino acids medium and is gelatinase negative). Partial sequence data from the small subunit (SSU) rDNA indicated that P. urceolata is among the Helotiales and close to the type species of Phialocephala. Sequence data from the internal transcribed spacer (ITS) region places P. urceolata closest to P. sphaeroides. The source of this contaminant is unknown but its taxonomic relationship with other root endophytic species and its ability to produce polyphenol oxidases suggest that the natural habitat of this species is possibly woody plant tissues or soil enriched with lignocellulose.