Herpothallon rubrogranulosum is described from forested wetlands in the Mid-Atlantic Coastal Plain of southeastern North America. It appears to be infrequent throughout its range, but locally abundant on bald cypress trees in areas of Francis Marion National Forest, South Carolina, USA. The species is characterized by a cream colored, ecorticate thallus with small, coarse granular pseudoisidia that are covered with variable amounts of orangered pigment that reacts Kþred-pink, and the production of abundant psoromic acid. It was previously confused with H. rubroechinatum, which is a rarer tropical species that differs markedly in having large, conspicuous pseudoisidia. Key words: Asexual reproduction, biodiversity, Cryptothecia, subtropical lichens, taxonomy, Trentepholia.