Anamorphic basidiomycetous yeast strains M9962T and M9963 were isolated from water samples collected from a small stream in Ohwakudani, Hakone, a hot-spring area in Japan. These belonged to a single species and were phylogenetically closely related to Bullera lagerstroemiae, although the ability to form ballistoconidia was not observed. Based on sequence analyses of the D1/D2 domain of the LSU rDNA and ITS regions and differences in G+C content, the name Cryptococcus tepidarius sp. nov. Takashima, Sugita, Toriumi et Nakase (Trichosporonales, Tremellomycetes, Basiomycota) is proposed for these isolates, with strain M9962T (=SP-5T =JCM 11965T =CBS 9427T) as the type strain. The strains grew in YM broth at 47 degrees C and in YM broth with the pH adjusted to 1.5 by HCl, indicating that the species is thermotolerant and acid-tolerant.