The genus Pannaria as presently understood is shown to be not homogeneous. It is divided in two genera: (1) Pannaria s. str., a tropical to warm-temperate, mostly foliose genus with no amyloid, apical structures in the asci, containing pannarin and related substances; it is further divided into three subgenera, of which subgenus Chryopannaria is newly described. (2) Fuscopannaria gen. nov., a temperate to arctic-alpine, mostly small-squamulose genus with amyloid apical structures in the asci, containing fatty acids and terpenoids; two subgenera are recognized, of which Micropannaria is newly described. All recognized species (16) in Fuscopannaria on the Northern Hemisphere are transferred to that genus.