The new stipitate species of Hypocrea, H. seppoi; is described, based on material freshly collected in Finland. Characterization of this species includes morphology of teleomorph and anamorph, culture studies and molecular phylogeny. H. seppoi is compared to the other European soil-inhabiting, stipitate Hypocrea species. It is characterized by small stromata, thin fibrous stipe, perithecia decurrent on the stipe, and by conidia that are smaller than those of H. leucopus and H. nybergiana. In addition, this work confirms the congenerity of Podostroma and Podocrea with Hypocrea on molecular phylogenetic grounds using sequences of the nuclear genes coding for RNA polymerase II subunit b (rpb2), translation elongation factor 1 alpha (tef1), and endochitinase (chi15-8).