The termite cultivated mushroom genus Termitomyces belongs to the family Lyophyllaceae (Agaricales, Basidiomycota). In this study, we presented a phylogeny of Termitomyces based on internal transcribed spacer (ITS1-5.8S-ITS2 = ITS), large subunit of nuclear ribosomal DNA (28S) and translation elongation factor 1 alpha (TEF-1α). The ancestral age of Termitomyces was estimated around 23 million years. Molecular clock analyses also indicate the presence of two clades, each clade with approximate stem age of 18 million years. We think that these clades can be treated for the infrageneric classification of Termitomyces. Furthermore, we also described a new species in the genus, Termitomyces dhofarensis from Dhofar region, located in southern Oman. The new species is edible. Local people collect it for generations for food and even trade it in the local markets. The species is described here based on a combination of morphological features of basidiomata and multigene phylogenetic analyses. The divergence time is estimated to be around 1.2 million years for Termitomyces dhofarensis. This is the first report of the genus from Arabian Peninsula.