Among octocorals, colonies of the deep-sea pennatulacean genus Umbellula Gray, 1870 are some of the most instantly recognisable forms. Historically however, species identification in this genus has been usually based on few morphological characters with very little knowledge of associated intraspecific variability. This fact, combined with the very limited access to these deep-sea organisms, has resulted in numerous uncertainties about the true characters that should be used in species determination and recognition of synonyms and questionable species. Recent phylogenetic analyses based on mitochondrial and nuclear DNA markers has shown to be an excellent complementary source of information to morphological examination, being able to detect incongruent taxonomic assignments in classifications based only on morphological characters. Molecular analyses can reveal the presence of paraphyletic or polyphyletic groupings of taxa that may then be the subject of further research integrating morphological and molecular techniques. This paper addresses the existence of a set of specimens initially assigned to the genus Umbellula Gray, 1870 but that have been shown to be distantly related to the type species Umbellula encrinus (Linnaeus, 1758) based on molecular phylogenetic hypotheses. Phylogenetic analyses based on four genetic markers, three mitochondrial (mtMutS, ND2, Cox1) and one nuclear (28S), validate the definition of a new family (Pseudumbellulidae fam. nov.) and two new genera (Pseudumbellula gen. nov. and Solumbellula gen. nov). These analyses also justify the segregation of some of the morphological characters previously included in the diagnosis of the genus Umbellula and the monotypic family Umbellulidae Kölliker, 1880. Moreover, a new species, Pseudumbellula scotiae sp. nov. is described and illustrated with material from the North Eastern Atlantic and compared with congeners. Additionally, the well-known but atypical species Umbellula monocephalus Pasternak, 1964 is transferred and described here as Solumbellula monocephalus (Pasternak, 1964), comb. nov., based on both molecular data and morphology.