A new species, Pedicularis bhutanica, is described from the Dagala region in Thimphu district, Bhutan. Discovered along well-used trekking routes, this species is morphologically distinct from its closest congeners, Pedicularis heydei Prain, known from India, Nepal and Bhutan, and P. pheulpinii Bonati, from China, by the absence of basal leaves, specific stem indumentum patterns, and distinctive features of its leaves, bracts, calyx, lower corolla lip and capsules. Phylogenetic analysis of ITS sequence data supports the recognition of this new species. It is assessed as Critically Endangered (CR) under IUCN Criterion B.