Micropsalliota is a relatively small genus, with 97 names recorded in previous research. In this study, two new species of Micropsalliota, M. bispora and M. vulgaris, have been identified based on morphological and phylogenetic evidence from subtropical regions of China. Morphologically, M. bispora is characterized by very small basidiomata, cymbiform basidiospores up to 9.0 μm long, white to cream pileus with fawn to dull red center, and tibiiform cheilocystidia; M. vulgaris is recognized by small basidiomata, medium-sized spores, white to cream pileus, covered with reddish brown to dark brown fibrils, various cheilocystidia that are up to 60 μm long, and hyphae of fibrils exhibiting pale brown vacuolar pigmentation. Their distinct taxonomic status is confirmed by the positions of the two new species in 4-locus (ITS, LSU, rpb2, tef-1α) phylogenetic trees. Detailed descriptions and morphological photographs of two new species are presented. To aid in diagnosis, a key to 35 species of Micropsalliota in China is provided.