Isodon hsiwenii, a new species from Yunnan in Southwest China, is here described and illustrated. In order to clarify the phylogenetic placement of the new species within Isodon, Bayesian and maximum likelihood analyses based on two nuclear ribosomal DNA regions and four plastid DNA regions for 71 Asian Isodon species were conducted. The results indicate that I. hsiwenii is a member of the largest and poorly resolved Clade III, as sister species of I. hirtellus. Isodon hsiwenii can be distinguished from I. hirtellus by its purplish puberulent indumentum (vs. greyish-white hirtellous indumentum) over the entire plant, rhombic-ovate laminae with margins entire or coarsely serrate and bases attenuate (vs. ovate to broadly ovate laminae with margins crenulate or serrulate and bases not attenuate), and inflorescences composed of cymes in widely spaced verticillasters (vs. inflorescences composed of cymes in narrow panicles).