We describe a new species of squirrel (Sciuridae, Callosciurus) from Hon Khoai Island, located off the coast of southern Vietnam (centered at ca. 8°26′08″N, 104°49′58″E) and discuss its phylogenetic position in the genus Callosciurus. Compared to other Callosciurus occurring on the Indochina Peninsula, the new species (Callosciurus honkhoaiensis) is strikingly small, especially head and body length, body mass, and hind foot length. Unlike other species of Callosciurus, the hairs at the tip of the tail are white with a black base, and the venter and feet are whitish cream. The new species at present is known only from the type locality, Hon Khoai Island. Phylogenetically, the new species is closely related to C. caniceps, suggesting that it evolved from C. caniceps or an ancestor in common with C. caniceps, possibly during the Pliocene. Genetic distances between the 2 species calculated from comparison of mitochondrial cytochrome b sequences are 10.1–10.3%. During both glaciations and interglaciations of the Pleistocene, the new species may have been isolated from other Callosciurus populations by rivers and sea, respectively.