The taxonomy of the genus Pycnoclavella on European shores has been controversial. Variability in colour patterns and other characters and the incompleteness of descriptions have contributed to the confusion. To clarify the taxonomic positions of the variety of forms attributable to this genus, western Mediterranean and north-eastern Atlantic sites were sampled. The present study employed morphological descriptions and a molecular approach, using a fragment of the cytochrome c oxidase I gene of 120 colonies for phylogenetic analyses. The results reveal an unexpected species richness of the genus Pycnoclavella in the Atlanto-Mediterranean region, with genetic data indicating there are six different species of Pycnoclavella in the area and morphological observations supporting these results. Pigment distribution, larval type and incubation mode were found to be the most useful morphological characters for discriminating the species. Based on collections at the type localites, Pycnoclavella aurilucens, which has an Atlanto-Mediterranean distribution, is assigned to one of the genetic clades. Clavelina nana is assigned to a Mediterranean clade of the genus Pycnoclavella. Three new species are described: Pycnoclavella communis, Pycnoclavella brava and Pycnoclavella atlantica. One of the genetic clades is left unnamed, because characters are insufficiently clear to allow the description of a morphospecies.