The taxonomy of Selaginella has been historically problematic due to the indistinguishable morphological characters within species complexes. The S. labordei group contains (S. subg. Stachygynandrum) 4–7 species, distributed from the Himalayas to eastern China. The taxonomy of this group was problematic due to few collections that were available to delimitate S. jugorum and S. tibetica, and large variation of the widely distributed S. labordei in different ecological conditions. Here, we re-evaluate the species delimitation of the S. labordei group using morphological, molecular and cytological data. A total of 55 individuals representing five species of the S. labordei group were investigated using two nuclear markers (26S rDNA, pgiC), one plastid marker (rbcL), as well as 43 plastid-coding sequences obtained from assembled plastid genomes. Five species are recognized based on the phylogenetic analysis of nuclear genes and plastid-coding sequences. The plastid genomes phylogeny showed a good resolution at lower taxonomic levels. All the individuals of the broadly defined S. labordei formed a monophyletic group in our analyses of different datasets. However, samples of S. chrysocaulos were strongly supported as non-monophyletic and were divided into two clades. One clade of S. chrysocaulos is described as a new species, Selaginella parachrysocaulos sp. nov., which is a cryptic species morphologically almost indistinguishable from S. chrysocaulos but with the microspores covered by a honeycomb-like network microstructure. The nuclear pgiC phylogeny and flow cytometry evidence indicate that some individuals of S. parachrysocaulos may be derived from polyploidization. Based on molecular and morphological evidence, S. sichuanica and S. daozhenensis are treated as synonymous to S. labordei, and S. hengduanshanicola to S. tibetica. Our results uncover the previously mysterious affinities of S. jugorum and S. tibetica, which are members of the S. labordei group.