Molecular and morphological data were used to explore evolutionary differentiation among populations of Nothobranchius in the Lake Malawi–upper Shire River and the Lakes Chilwa–Chiuta drainage systems in Malawi. The aim of the study was to test the hypothesis that Nothobranchius of the Malawi–Shire system constitute a separate evolutionary group from Nothobranchius kirki. Mitochondrial and nuclear sequence data show a strongly supported phylogenetic split into two monophyletic groups separating the Lake Malawi basin fish from N. kirki. Unlike N. kirki, Lake Malawi–Shire fish do not deviate from neutrality and express an excess of rare haplotypes and mutations in terminal branches, characteristic of recently expanded populations. Further, the two groups significantly differ in morphology. Two body characters (dorsal-fin base length and pre-pelvic–pre-anal distance) are significantly different between the two species in both sexes. Several other characters are significantly different in either male or female comparisons with respect to both standard and head lengths, and robust morphological differentiation is detected by multivariate analysis. The two groups are readily distinguished on the basis of male colouration, especially in scale centres and the caudal fin. On the basis of this differentiation at the molecular and morphological levels, in addition to colouration, the Lake Malawi–Shire fish are hereby formally recognized as constituting a new species, Nothobranchius wattersi. This distinction is in agreement with the geomorphologic and recent climatic history in the region.