Thailand, a part of the Indo-Burma biodiversity hotspot, has many endemic animals and plants. Some of its fungal species are difficult to recognize and separate, complicating assessments of biodiversity. We assessed species diversity within the fungal genera Annulohypoxylon and Hypoxylon, which produce biologically active and potentially therapeutic compounds, by applying classical taxonomic methods to 552 teleomorphs collected from across Thailand. Using probability of correct identification (PCI), we also assessed the efficacy of automated species identification with a fungal barcode marker, ITS, in the model system of Annulohypoxylon and Hypoxylon. The 552 teleomorphs yielded 137 ITS sequences; in addition, we examined 128 GenBank ITS sequences, to assess biases in evaluating a DNA barcode with GenBank data. The use of multiple sequence alignment in a barcode database like BOLD raises some concerns about non-protein barcode markers like ITS, so we also compared species identification using different alignment methods. Our results suggest the following. (1) Multiple sequence alignment of ITS sequences is competitive with pairwise alignment when identifying species, so BOLD should be able to preserve its present bioinformatics workflow for species identification for ITS, and possibly therefore with at least some other non-protein barcode markers. (2) Automated species identification is insensitive to a specific choice of evolutionary distance, contributing to resolution of a current debate in DNA barcoding. (3) Statistical methods are available to address, at least partially, the possibility of expert misidentification of species. Phylogenetic trees discovered a cryptic species and strongly supported monophyletic clades for many Annulohypoxylon and Hypoxylon species, suggesting that ITS can contribute usefully to a barcode for these fungi. The PCIs here, derived solely from ITS, suggest that a fungal barcode will require secondary markers in Annulohypoxylon and Hypoxylon, however. The URL http://tinyurl.com/spouge-barcode contains computer programs and other supplementary material relevant to this article.