We estimated phylogeny in the lichen-forming ascomycete family Pannariaceae. We specifically modelled spatial (across-site) heterogeneity in nucleotide frequencies, as models not incorporating this heterogeneity were found to be inadequate for our data. Model adequacy was measured here as the ability of the model to reconstruct nucleotide diversity per site in the original sequence data. A potential non-orthologue in the internal transcribed spacer region (ITS) of Degelia plumbea was observed. We propose a revised generic classification for the Pannariaceae, accepting 30 genera, based on our phylogeny, previously published phylogenies, as well as available morphological and chemical data. Four genera are established as new: Austroparmeliella (for the 'Parmeliella' lacerata group), Nebularia (for the 'Parmeliella' incrassata group), Nevesia (for 'Fuscopannaria' sampaiana), and Pectenia (for the 'Degelia' plumbea group). Two genera are reduced to synonymy, Moelleropsis (included in Fuscopannaria) and Santessoniella (non-monophyletic; type included in Psoroma). Lepidocollema, described as monotypic, is expanded to include 23 species, most of which have been treated in the 'Parmeliella' mariana group. Homothecium and Leightoniella, previously treated in the Collemataceae, are here referred to the Pannariaceae. We propose 41 new species-level combinations in the newly described and re-circumscribed genera mentioned above, as well as in Leciophysma and Psoroma.