Five isolates of a novel species of the yeast genus Malassezia were isolated from animals in Japan and Brazil. Phylogenetic trees based on the D1/D2 domains of the large-subunit (26S) rDNA sequences and nucleotide sequences of the internal transcribed spacer 1 region showed that the isolates were conspecific and belonged to the genus Malassezia. They were related closely to Malassezia dermatis and Malassezia sympodialis, but were clearly distinct from these two species and the other six species of Malassezia that have been reported, indicating that they should be classified as a novel species, Malassezia nana sp. nov. Morphologically and physiologically, M. nana resembles M. dermatis and M. sympodialis, but can be distinguished from these species by its inability to use Cremophor EL (Sigma) as the sole lipid source and to hydrolyse aesculin. The type strain of M. nana is NUSV 1003(T) (=CBS 9557(T)=JCM 12085(T)).