Species delimitation within the core group of Peziza is highly controversial. The group, typified by P. vesiculosa, is morphologically coherent and in previous analyses of LSU rDNA sequences it formed a highly supported clade. Phylogenetic diversity and species limits were investigated within the group using sequences from the complete ITS region (ITS1-5.8S-ITS2). Eighty-three specimens were selected for molecular study from a larger sample of material studied morphologically to explore the intra- and interspecific variation of each putative species. The sister group taxon, P. ampelina was used as the outgroup and two specimens of P. subcitrina were additionally included. Seven independent lineages of rDNA were identified (I–VII), each representing one to several species. These lineages form two larger clades, A (II, and I or III) and B (IV–VII), supported by macromorphology: small (generally <2 cm), shallowly cup- to disc-shaped apothecia (A) and large (up to 15 cm), deeply cup-shaped to expanded apothecia (B). The overall exciple structure (a stratified or non-stratified medullary layer) and to some degree spore surface relief, likewise support the groupings. Clade A contains taxa with smooth or nearly smooth spores (except for P. lohjaënsis), while clade B contains taxa with a range of spore ornamentations, from smooth, finely warty to distinctly warty, and spiny. The position of groups I (P. vesiculosa and P. ammophila) and III (P. lohjaënsis) are uncertain, and these taxa also deviate morphologically from the other clade A members. The following species are recognized based on morphology and ITS rDNA analyses: P. ammophila and P. vesiculosa (I); P. alcis, P. ampliata, P. domiciliana, P. fimeti, P. nivalis, and a number of putative species or intraspecific entities (II); P. lohjaënsis (III); P. sp. c (IV); P. arvernensis (V); P. echinispora and P. sp. d (VI); and P. varia (VII). The nomenclature of these species is analyzed and taxa are typified as necessary. Based on ITS and morphology, we found no justification for recognizing more than one species in the ‘P. varia complex’, including 27 specimens that have been referred to under the names P. cerea, P. micropus and P. repanda, from an array of substrates and different geographical areas. Morphological characters previously used to delimit species within this complex, such as colour variation of the apothecia, presence or absence of a stipe, stratified or non-stratified medullary exciple (or thickness of the excipular layers), cell types in the outermost exciple and moniliform vs filiform paraphyses were not correlated with the subgroups supported by ITS analyses and appeared to be plastic. Therefore, P. cerea and P. micropus are placed in synonymy with P. varia. The name P. repanda is rejected. Levels of sequence divergence were low within group II, comprising 33 small apothecial specimens. Twelve fine-scale lineages were identified, but the analyses did not resolve relationships among these. P. granulosa sensu Boudier is considered a synonym of P. fimeti. These have previously been distinguished mainly by occurrence on various soil types, including burnt soil and soil mixed with sawdust or woodchips vs on dung. The substrate and habitat have been much emphasized in the taxonomy of Peziza, but the results obtained here indicate that populations on a diverse array of substrates may be closely related, or indeed, conspecific.