A new species of pipefish, Stigmatopora harastiisp. nov., is described based on the male holotype and two female paratypes, 136.3–145.5 mm SL, collected from red algae (sp.?) at 12 meters depth in Botany Bay, New South Wales (NSW), Australia. The new taxon shares morphological synapomorphies with the previously described members of Stigmatopora, including principle body ridges, fin placement, slender tail, and absence of a caudal fin. It is morphologically and meristically similar to Stigmatopora nigra, including snout length and shape, dorsal-fin origin on 6th–7th trunk ring, and lateral trunk ridge terminating on the first tail ring. Stigmatopora harastiisp. nov. is distinguished from its congeners, however, by characters of the head and first trunk ring, distinct sexual dimorphic markings on sides and venter of anterior trunk rings, and red background coloration in life. The new taxon can be further differentiated by genetic divergence in the mitochondrial COI gene (uncorrected p-distances of 9.8%, 10.1%, 10.7%, and 14.6%, from S. argus, S. macropterygia, S. narinosa, and S. nigra, respectively). The type locality is characterised by semi-exposed deep-water sandy areas interspersed with boulders, flat reefs, and an absence of seagrass beds, in which S. harastii has been observed living in facultative associations with a finger sponge and red algae at depths of 10–25 meters, compared to the shallow coastal and estuarine habitats preferred by the fucoid algae and seagrass-associating members of Stigmatopora. Stigmatopora harastiisp. nov. represents the fourth species of Stigmatopora recorded in temperate southern Australia.