The genus Usnea is taxonomically revised, resulting in 43 species for Japan and Taiwan. It consists of three subgenera, Usnea, Eumitria (Stirt.) Zahlbr. and Dolichousnea Y. Ohmura, and two sections in the subgenus Usnea, Usnea and Ceratinae (Motyka) Y. Ohmura. Among the species listed in the present study, U. dendritica Stirt., U. hesperina Motyka, U. nidifica Taylor, U. sinensis Motyka and U. trichodeoides Vain, are reported as new to Japan and Taiwan. Usnea pygmoidea, formerly placed under the subspecies of U. confusa, is elevated to species level. The subgenus Dolichousnea is newly proposed; it is characterized by the pendent thallus, isotomic-dichotomous branching, the pres ence of annular-pseudocyphellae between segments, a thicker hypothecium, and a positive iodine re action in its axis. The subgenus Usnea is separated into two sections, mainly on the basis of differ ences in the cortical hyphal type (leptodermatous and pachydermatous types). The morphology of so- ralia is found to be correlated with their origins, the type of papillae, and the occurrence of soredia and/or isidiomorphs. Annular-cracks which regularly occur between segments are separated into two categories: annular-pseudocyphellae and cracks originating in the separated cortical hyphae. Cortical tissues are found to be one of four types which areflorida-, merrillii-, ceratina-, or baileyi-types. The specificity of lichen substances to species is recognized. Twenty-four species show no chemical varia tion, while 19 species have two or three (rarely four) chemical races within a species.