We evaluated the taxonomic status of specimens representing two listed rare species of Pannaria in the Pacific Northwest, P. rubiginosa and P. rubiginella, based on DNA sequences of recently collected samples. We combined those data with new sequences for other Pannaria species in North America and South America as well as all available sequences from the P. rubiginosa and P. lurida groups plus closely related P. hookeri, based on results from initial analyses. Historically, P. rubiginosa and P. rubiginella have been separated in the Pacific Northwest based on the paraphenylenediamine (P) reaction of the cortex versus the medulla. Phylogenetic reconstruction based on ITS sequences demonstrated that both chemotypes belong to a single well-supported clade, and that it belongs to neither P. rubiginosa nor P. rubiginella. Instead, the Pacific Northwest material appears to belong to an undescribed species very similar morphologically to P. rubiginosa, but genetically and geographically distinct from that species and with smaller spores. We describe this new species as Pannaria oregonensis, assigning all of the material from the Pacific Northwest to this taxon, regardless of the location of the P+ reaction. This conclusion is supported by phylogenetic analysis of co-occurring populations of different chemotypes. We recommend removing P. rubiginella from the North American checklist. We also provide a revised key to the North American species of Pannaria, based on our current understanding. Furthermore, based on new sampling of Pannaria species from North and South America, we show a need for revision of the isidiate species of Pannaria, in particular P. tavaresii in the broad sense.