Two strains of a novel basidiomycetous yeast species were isolated from the gut of wood-boring larvae collected in the Baotianman Nature Reserve, the central China. Sequence analysis of the D1/D2 domains of the large subunit (LSU) rRNA gene and internal transcribed spacer (ITS) regions showed that these yeasts belong to the Bulleromyces clade and formed a cluster together with eleven undescribed Cryptococcus species. The novel species differed from its closest known species, Cryptococcus rajasthanensis, by 3.3 % divergence (15 substitutions and 6 gaps over 630 bases) in the D1/D2 domains, and by 13.4 % divergence (41 substitutions and 27 gaps over 508 bases) in the ITS regions. Physiologically, the fermentation of glucose, galactose, sucrose, trehalose, and raffinose in Durham tubes was observed for the strains of this new yeast. Based on the phenotypical and molecular characteristics presented, the two strains are proposed as a new species, Cryptococcus nanyangensis sp. nov., with the type strain KCY-1(T) (=CICC 1976(T) = CBS 12474(T)).