Here, we describe a new species of Schindleria, Schindleria nana, from Lizard Island, Great Barrier Reef, Australia. The new species belongs to the long dorsal-fin type (LDF) of Schindleria and is the first very small (‘dwarf’) LDF species (< 13 mm TL) to be described. It is characterized by an elongate and narrow body; a dorsal fin longer than the anal fin (predorsal-fin length 63.3% of SL: preanal-fin length 72.1% of SL); a long, relatively narrow head (head width 46.2% of head length) with a straight profile; small and round eyes (24.9% of head length); a large postorbital distance (52% of head length); a narrow, slender pectoral radial plate (width at origin 46.4%, maximum width 57.0% of pectoral radial plate length); 16 dorsal-fin rays; 11-12 anal-fin rays; first anal-fin ray ventral to the sixth dorsal-fin ray; six procurrent rays gradually increasing in length, last ray elongated, twice the length of the penultimate ray; premaxilla with tiny, conical, densely set teeth; dentary with zero teeth in the holotype and with two teeth on the left dentary and five teeth on the right dentary in the adult paratype; females with few (approx. 4-7) but very large eggs (3.4-3.9% of SL); urogenital papilla inconspicuous, de facto just an urogenital opening; swim bladder not pigmented; black eyes; no other external pigmentation on the body.