The dwarf galaxias, Galaxiella pusilla (Mack), is a small, threatened freshwater fish from coastal south-eastern Australia. Recent genetic studies, using multiple nuclear and mitochondrial DNA markers, found substantial differences between populations in western Victoria and south Australia ('west region') compared to eastern Victoria, Flinders Island, and Tasmania ('east region') that suggest the presence of a cryptic species. Morphological measurements and meristic counts from multiple populations within each region were undertaken to investigate potential differences between regions. Several characters, found to discriminate between individuals in the regions and to be diagnostic for two taxa, were used to describe a new species, Galaxiella toourtkoourt, for the west region. This is only the second species in the Galaxiidae to exhibit sexual dimorphism. The original description of Galaxiella pusilla, based on five specimens, is revised following examination of a large number of individuals. Both species are considered nationally threatened and are categorised as 'endangered'; the revised distribution of G. pusilla s.s. is reduced by approximately 60%. A number of inconsistencies in the most recent revision of the genus Galaxiella are also corrected.