We provide molecular phylogenetic evidence that the obscure genera Palmophyllum Kütz. and Verdigellas D. L. Ballant. et J. N. Norris form a distinct and early diverging lineage of green algae. These palmelloid seaweeds generally persist in deep waters, where grazing pressure and competition for space are reduced. Their distinctness warrants recognition as a new order, the Palmophyllales. Although phylogenetic analyses of both the 18S rRNA gene and two chloroplast genes (atpB and rbcL) are in agreement with a deep-branching Palmophyllales, the genes are in conflict about its exact phylogenetic placement. Analysis of the nuclear ribosomal DNA allies the Palmophyllales with the prasinophyte genera Prasinococcus and Prasinoderma (Prasinococcales), while the plastid gene phylogeny placed Palmophyllum and Verdigellas as sister clade to all other Chlorophyta.