Phaeostigma is a controversial taxon for its taxonomic status and phylogenetic position in the subtribe Artemisiinae, Asteraceae. To address those questions, a phylogenetic evaluation of Phaeostigma and its related genera of subtribe Artemisiinae was carried out based on molecular as well as morphological character data. DNA sequences of nuclear ribosomal DNA internal transcribed spacer, the single copy nuclear CDS gene, and five chloroplast DNA loci (psbA‐trnH, rpl16, trnC‐ycf6, trnL‐F, and ycf6‐psbM) were used to construct gene trees, and variation patterns of 20 morphological characters were analyzed. In addition, pollen morphology was examined under scanning electron microscopy for representative species of Phaeostigma and Ajania, from which the former was separated by earlier taxonomists. All the above analyses showed: (i) Ajania tibetica (Hook.f. & Thomson) Tzvelev, A. purpurea C. Shih, and A. ramosa (Chang) C. Shih should be merged into Phaeostigma so that it is a monophyletic genus with six species, P. ramosum (A. ramosa), P. purpureum (A. purpurea), P. tibeticum (A. tibetica), P. quercifolium (W. W. Sm.) Muldashev, P. salicifolium (Mattf.) Muldashev, and P. variifolium (C. C. Chang) Muldashev; (ii) all six Phaeostigma species have the Artemisia‐type (microechinate) of pollen, reflexed leaf margin, and flowering branches with sericeous indumentum; (iii) two controversial species of Ajania, A. pallasiana and A. shiwogiku, have closer relationships with Ajania s.str. than with Phaeostigma, and should be kept in Ajania. Considering all the evidence from present and previous studies, we conclude that geographic and ecological factors as well as secondary contacts play important roles in the divergence and speciation of the genus Phaeostigma.