Aloe liliputana is a new species endemic to coastal Pondoland, north of Port Saint Johns, in the Eastern Cape Province, South Africa, is described. It belongs to section Graminialoe Reynolds, a group of small grass aloes with which it shares a grassland and often Afromontane habitat (Reynolds 1950). The new species is related to Aloe parviflora Bak. from which it is distinguished by its thin wiry spreading subterete leaves 2mm in diameter, not broadening towards the apex and lacking the dense basal raised tubercles, as well as its floral bracts which are as long or a little longer than the pedicel length, and its perianth of 8–11mm long. This represents one of the smallest aloes of the world and, in fact, of all southern African aloes this species has the narrowest leaves.