The biscuit star Tosia australis Gray, 1840 is a well known component of the shallow rocky reef fauna of south-eastern Australia. The putative T. australis species complex was subjected to reproductive, morphometric and molecular analyses. Molecular analyses of the data from three markers (mitochondrial COI and 16S rRNA and the nuclear non-coding region ITS2) confirmed the presence of a cryptic species, the morphology of which does not agree with any of the existing nominal species. Two separate reproductive modes were observed within the complex and documented via scanning electron microscopy. T. neossia, sp. nov., described herein from south-eastern Australia, is shown to release gametes from gonopores on the actinal surface. Embryos develop first into non-feeding, non-swimming brachiolaria, and then into tripod brachiolaria before metamorphosis. No surface cilia are present at any point throughout development of T. neossia. T. australis sensu stricto is shown to release gametes from the abactinal surface. Embryos develop into non-feeding, swimming brachiolaria before metamorphosis. Whereas T. australis var. astrologorum is confirmed as synonymous with T. australis, the status of the putative Western Australian taxon T. nobilis remains unresolved.