Based on traditional morphology, sequence data, and phylogenetic analyses, 18 new species are here described: Coprinellus christianopolitanus, Coprinopsis musae, C . u d i c o l a , P s a t h y re l l a a re n o s a , P. c a r m i n e i , P. fennoscandica, P. ichnusae, P. lilliputana, P. lyckebodensis, P. madida, P. rybergii, P. sabuletorum, P. scanica, P. siccophila, P. stridvallii, P. sublatispora, P. vesterholtii, and Typhrasa nanispora. Psathyrella hololanigera and P. tenera are reported as new to Europe and P. parva as new to the Nordic countries. A four-gene dataset on Psathyrellaceae were analyzed by Maximum Parsimony, Maximum Likelihood, and Bayesian methods. Constraint analyses were performed to determine limits of /Psathyrella, and to evaluate whether the / Coprinellus, /cordisporus, and /gossypina clades could be regarded with confidence as monophyletic clades outside of the clade /Psathyrella. This was not unambiguously supported. Based on the phylogenetic results, Kauffmania is proposed as a monotypic genus for the species P. larga and Typhrasa for P. gossypina and the new described species T. nanispora. The genus Homophron is formally validated and three combinations are proposed: H. spadiceum, H. cernuum, and H. camptopodum. The genus Cystoagaricus Singer is emended and the following new combinations are proposed: C. hirtosquamulosus, C. squarrosiceps, C. olivaceogriseus, and C. silvestris. Neotypes have been selected for seven species described by Fries, and ITS sequence data for these were generated. The following new combinations are proposed: Coprinopsis canoceps, C. cineraria, C. melanthina, C. submicrospora, C. uliginicola, and Typhrasa gossypina. Brief comments are given to other species of interest. Psathyrella ornatispora were found not to belong in Psathyrellaceae. A key to 106 psathyrelloid species in Northern Europe is provided.