Four putative “Chantransia” isolates were collected from four locations in Hubei and Yunnan Provinces, China. Morphological analyses were conducted on all isolates. Two specimens (HB26 and YN2) fit the morphological description of A. pygmaea, while the other two isolates (YN1 and YN3) varied in morphology, but were within the circumscription of Audouinella hermannii. Due to the fact that the morphological characters of the “Chantransia” stages of order Batrachospermales and the species of genus Audouinella are too similar to be distinguished, a molecular analysis was performed to clarify the phylogenetic position of these four isolates based on rbcL and psbA sequences. Two “pygmaea” specimens collected from Jiugong Mountain, Hubei Province (HB26) and Shimen Gorge, Yunnan Province (YN2), such as S. jiugongshanensis and S. shimenxiaensis, are proposed primarily based on the DNA sequence data generated in this study. The description of these two new species provides more molecular data for phylogenetic analysis of the genus Sheathia. In addition to these newly described species, the results strongly support that those “hermannii” isolates (YN1 and YN3) collected from Yunnan Province were the “Chantransia” of S. arcuata. However, their gametophyte stages have not been found, meaning that critical diagnostic morphological features were unavailable and molecular methods were the only means for ascertaining their phylogenetic position. Considering the extensive application of the rbcL and psbA genes in phylogenetic analyses of freshwater red algae, we recommend using these two genes to identify species when no morphological characteristics are available.