Based on morphological and phylogenetic analyses, a new species, Inocybe hongshiensis was discovered in Jilin Province of China. The new species is characterized by a yellowish squarrose pileus, lilac stipe, smooth basidiospores, slightly thick-walled hymenial cystidia, and an ecology in mixed forests. Phylogenetic analyses of the ITS-nrLSU datasets led to the identification of a new species within the Fuscidula clade. Morphological descriptions, line illustrations, and discussions of close relatives are provided.