Southern Australian waters feature remarkably diverse assemblages of the sea spider family Callipallenidae Hilton, 1942. The most speciose of the three Australian-endemic genera currently recognised has been known as Meridionale Staples, 2014, but is here reinstated under the name Pallenella Schimkewitsch, 1909 based on its type species Pallenella laevis (Hoek, 1881). This genus includes several brightly coloured forms that occur in high abundance on arborescent bryozoans. However, considerable similarity of congeners and scarcity of diagnostic characters continue to render species delineation in this genus challenging. Using an integrative taxonomic approach, we combine detailed morphological investigation with analysis of two genetic markers (mitochondrial cytochrome c oxidase subunit I, and nuclear rDNA including internal transcribed spacers 1 and 2) to explore the extraordinary species richness of the genus Pallenella in south-east Tasmania. In agreement with our morphology-based segregation of different species and morphotypes, we recovered well-supported corresponding clades in the genetic analyses. Strong mito-nuclear concordance in the two markers supports the inference of sustained reproductive isolation between the sympatrically occurring forms. Based on these findings, we distinguish a total of 13 Tasmanian congeners, representing the most diverse assemblage of sympatric species in the same microhabitat reported for a single pycnogonid genus. Within this assemblage, we (1) record the type species P. laevis for the first time after almost 150 years, (2) delineate the two Tasmanian morphotypes of the provisional ‘variabilis’ complex, and (3) describe two species new to science (P. karenae, sp. nov., P. baroni, sp. nov.). Despite considerable genetic divergences between most congeners, only few and often subtle characters are found to be suitable for morphology-based delineation. Notably, colouration of living specimens is suggested to be informative in some cases. For morphology-based species identification of preserved specimens, a key relying on combinations of characters rather than single diagnostic features is proposed.