We used three molecular markers (COI-5P, rbc L and UPA) to investigate the diversity of Hypnea spp., an economically important red algal genus, collected from India. Our concatenated tree (COI-5P and rbc L) supported the monophyly of two new species, Hypnea indica sp. nov. and Hypnea bullata sp. nov. H. indica diverged from its closest two sister species, Hypnea cervicornis and Hypnea tenuis (by 15.9 and 11.2%, respectively, in COI-5P; and 3.4 and 3.2% in rbc L). We describe H. indica as a new species characterised by an erect, percurrent main axis with spine-like branchlets in acute angles, straight and forked apices, axial cells surrounded by large periaxial cells or two cells similar in size to the axial cell, and the presence of lenticular thickening in the cross-section of the thallus. H. bullata diverged from its closest sister species, Hypnea brasiliensis (by 10.9% in COI-5P and 3.3% in rbc L). H. bullata is characterized by a prostrate thallus up to 1.5 cm in height, highly anastomosed, with an axial cell surrounded by similar sized, or smaller, periaxial cells, tetrasporangia present near the base of branchlets, and the presence of lenticular thickening.