Reunionese species of Microlaemus Lefkovitch are reviewed and a new species with modified male head is described. Microlaemus xenocephalus sp. nov. is the only known species in the genus with a strong sexual dimorphism in which males have an expanded head. In addition, the new species can be readily distinguished from its congeners by the large body size (2.8–3.5 mm vs. less than 2.4 mm in length) as well as the form of the male aedeagus (very elongate aedeagus, with each parameral lobe bearing a large, sabre-shaped apical seta). The three distinctive species from Réunion Island (i.e., M. mirificus (Grouvelle), M. sulcifrons (Grouvelle), and M. xenocephalus sp. nov.) are diagnosed, illustrated, and compared to each other. Morphology of male genitalia is used for the first time for diagnostic purposes within the species mentioned above. Finally, the key to species from Réunion Island and Mauritius is updated, and an annotated species list of Microlaemus of the world is provided.