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A survey and inventory of tree canopy bio-diversity for cryptogams (myxomycetes, macrofungi, mosses, liverworts, lichens and ferns) in the Great Smoky Mountains National Park resulted in the discovery of an undescribed myxomycete species. This taxon is classified in the order Physarales, family Di-dymiaceae and genus Diachea. A combination of morphological characteristics distinguishes Diachea arboricola H.W. KellerM. Skrabal sp. nov. from all other species in the genus: peridium iridescent gold to silvery gray; stalk reddish orange above and whitish below, filled with crystals; capillitial threads stiff, dichotomously branched and arising from the tip of the columella; spore ornamentation uniformly covering the entire spore surface, appearing spiny with light microscopy, with scanning electron microscopy as vertical processes with capitate, clustered, spike-like tips. This type of spore ornamentation has not been found in any other Diachea species. Diachea arboricola is known only from the tree canopy, ranging in height from roughly 3 to 21 m, on three tree species, Fraxinus americana, Juniperus virginiana and Quercus alba. Observations of plasmodial growth and fruiting body development are described based on moist chamber cultures. Tree canopy observations in situ suggest that the plasmodium of this species migrates over extensive vertical areas of tree bark. Ecological factors are discussed that include pH of bark substrata. The species description is based on abundant sporangia from 17 different collections. A key to the species of Diachea is provided to aid in the identification of this taxon.