DNA sequencing of the plastid encoded rbcL gene supported by morpho-anatomical features reveals Gracilaria parva sp. nov. from Panama and Ecuador in the tropical eastern Pacific Ocean. In the rbcL phylogram, G. parva occurs in a clade sister to the western Atlantic species G. galatensis. Morphologically and anatomically, G. parva is distinguished from two similar, described tropical eastern Pacific species, G. brevis and G. veleroae by its small size, to 2.5 cm tall with branch widths mostly <2 mm occasionally to 4 mm, and by its two to three cell layered cortex. Gracilaria brevis and G. veleroae are taller, have wider branches, and a one cell layered cortex. DNA sequencing is needed to resolve the many diminutive species in the tropical eastern Pacific, particularly those occurring in turf communities. DNA sequencing of historical type specimens from the 19th and 20th centuries is also needed to correctly apply names in this region.