A single female specimen (25.6 mm in standard length) of the thread-like Indo-Pacific pygmy syngnathid Kyonemichthys rumengani Gomon, 2007 was collected from fringing reef at eight meters depth from Okinawa Island in the Ryukyu Archipelago of southern Japan. It represents the first specimen of this species to be housed in a museum fish collection in Japan, where for the first time it is available for molecular analysis. We assessed the morphological hypothesis that previously suggested Kyonemichthys Gomon, 2007 is allied with the Indo-Pacific pygmy pipehorse genera Acentronura Kaup, 1853 and Idiotropiscis Whitley, 1947 based on similar characteristics of the head angled slightly ventrally from the abdominal axis, dermal appendages, and flexible tail lacking a caudal fin. However, Kyonemichthys differs from these genera in having a dorsal-fin origin on the tail versus the trunk, a characteristic shared by two Indo-Pacific pipefish genera: the morphologically similar Urocampus Günther, 1870 and the distinct worm-like Siokunichthys Herald, 1953. We therefore investigated the evolutionary relationships of K. rumengani within Syngnathidae based on the genetic divergence of the mitochondrial CO1 gene (uncorrected p-distances) and a phylogenetic hypothesis generated from the analysis of three partial mitochondrial genes (12S, 16S, and CO1). Genetic analyses demonstrated that Kyonemichthys and Urocampus are closely related and form a strongly supported clade that excludes the phylogenetically distant Acentronura, Idiotropiscis, and Siokunichthys. Furthermore, morphological comparisons of K. rumengani with members of Urocampus revealed numerous synapomorphies distinct from the pygmy pipehorses, including meristic characters, trunk and tail ridge configurations, placement of dorsal fin on the tail, and shape of the prehensile tail. Therefore, based on the genetic and morphological characteristics, we suggest that Kyonemichthys is sister to Urocampus and is allied with pipefishes rather than with pygmy pipehorses. In addition, the Japanese standard name "Hari-youji" was proposed for K. rumengani.