The calcified green algal genus Halimeda is one of the most ecologically important but morphologically diverse seaweeds in sub-tropical and tropical waters. Because of its high morphological plasticity, the identification of Halimeda species based on morphological characters is challenging without the assistance of molecular analysis. To date, the species diversity of Halimeda in Taiwan and its overseas territories has not been investigated with the assistance of DNA sequencing, and this taxonomic knowledge gap should be filled. The present study initiates a systematic examination of the species diversity and distribution of Halimeda in Taiwan, Spratly Island, and Dongsha Atoll in the South China Sea, using DNA sequence data (plastid tufA gene and rbcL) and morphological data. Our DNA analyses revealed the presence of 10 Halimeda species (Halimeda borneensis, Halimeda cylindracea, Halimeda discoidea, Halimeda distorta, Halimeda macroloba, Halimeda minima, Halimeda opuntia, Halimeda renschii, Halimeda taiwanensis sp. nov., and Halimeda velasquezii) in the waters around Taiwan, Spratly Island, and Dongsha Atoll. The majority of the species could be readily distinguished by their morphological and anatomical characters. The proposed new species, H. taiwanensis, was differentiated not only by our algorithmic species delimitation analyses (statistical parsimony network analysis and automated barcode gap discovery), but also by its morphological features. The proposed new species differs from two externally resembled species, H. cuneata and H. discoidea, in having an undulated segment margin, the complete fusion of medullary siphons at the node, the lack of segment stalk, and the presence of a large primary utricle. Here, we present the up-to-date taxonomic account, molecular diversity, and geographical distribution of Halimeda spp. in Taiwan and associated areas of the South China Sea. Environmental factors that might drive the occurrence and latitudinal distribution of the species are also discussed.