Genetic variation was examined in two complex cases of Indo-Pacific pygmy angelfishes (genus Centropyge; Pomacanthidae). The lemonpeel pygmy angelfish C. flavissima (Cuvier and Valenciennes) has a geographically disjunct Indian vs. Pacific distribution and the individuals from these two regions differ by their colour patterns. Previous research on C. flavissima has shown mitochondrial introgression from two related species, C. eibli in the eastern Indian Ocean and C. vrolikii in the Pacific Ocean. Using the 16S rDNA and the CO1 gene as phylogeographic markers, we found no mitochondrial haplotypes in common between Indian Ocean C. flavissima and C. eibli, confirming partial genetic isolation, albeit recent. Also, we found substantial genetic differences between Indian and Pacific C. flavissima populations at the nuclear ETS-2 intron locus. The Indian Ocean form of C. flavissima, thus geographically isolated by >2000 km distance from its Pacific Ocean counterpart, is described as a new species, Centropyge cocosensis sp. nov. Centropyge cocosensis sp. nov. differs in appearance from C. flavissima in having a conspicuous blue iris and a fainter, bluish eye ring. We also found that the yellow pygmy angelfish C. heraldi Woods and Schultz consists of two genetically distinct entities, one distributed widely in the northern tropical Indo-West Pacific, the other distributed in the southern Pacific Ocean. The name originally given to the blackfin pygmy angelfish, C. woodheadi Kuiter, is here resurrected to designate the latter.