We used a genetic distance approach in conjunction with molecular phylogeny to establish species boundaries and detect cryptic lineages in the Parmotrema reticulatum – P. pseudoreticulatum complex. The phylogeny of specimens from a broad geographic distribution was reconstructed from the internal transcribed spacer region. Pairwise genetic distances were calculated and compared to an intraspecific range defined for the parmelioid lichens to circumscribe species-level groups. Our results showed that P. reticulatum and P. pseudoreticulatum are polyphyletic, being comprised of at least seven well-supported lineages. In contrast, the genetic distance approach revealed ten cryptic lineages within the P. reticulatum – P. pseudoreticulatum complex. Neither morphology nor geography was conclusive in attempting to corroborate these genetic lineages. However FST indices suggest significant genetic differentiation between these lineages. Our results suggest that the morphology-based circumscriptions underestimated species in Parmotrema and that, in some cases, genetic distances may be used as an additional tool to determine species boundaries in morphologically cryptic species complexes. The most significant contribution of the present study is the application of a fast and accurate method to identify problematic groups and candidate species using the ITS locus with a genetic distances approach.