Yelsemia arthropodii, causing smut galls of Arthropodium in Australia, is described as a new genus and species of Tilletiales. It has been found twice in the field as a capsule smut, in dry inland areas of Western Australia and New South Wales. Seed inoculated with ustilospores produced infected plants with systemic mycelium and galls in capsules, pedicels, peduncles and leaf axils. Dark brown, unicellular ustilospores have two prominent opposite hyaline polar caps through which they geminate to produce holobasidia bearing 2–5 apical septate fusiform sporidia. Sporidial cells germinate by hyphae which often anastomose with one another or with cells of other sporidia. Yelsemia is compared with Ustilago speculariae, a capsule smut of Triodanis in the USA with similar ustilospores, whose germination is unknown.