A novel species of the genus Cryptococcus was isolated from sediment collected on the deep-sea floor of Suruga Bay, Japan. Nucleotide sequences of 18S rDNA, internal transcribed spacers, 5.8S rDNA and the D1/D2 region of 26S rDNA of strain SY-260(T) suggested affinities to a phylogenetic lineage that includes Cryptococcus luteolus. Comparisons of the rDNA sequences of each region clarified that strain SY-260(T) is related distantly to Bullera coprosmaensis and Bullera oryzae, but is distinct at the species level. As ballistoconidia and sexual reproduction were not observed in strain SY-260(T), this strain is described as Cryptococcus surugaensis sp. nov. (type strain, SY-260(T)=JCM 11903(T)=CBS 9426(T)).