Nine strains of a novel yeast species were isolated from rotting wood, tree bark, ant nests or living as endophytes in leaves of Vellozia gigantea. Analysis of the sequences of the internal transcribed spacer (ITS) region and the D1/D2 domains of the large subunit rRNA gene showed that this species was related to Candida insectorum in the Yamadazyma clade. The novel species differed from closely related species by 10 and 11 substitutions in the ITS region and the D1/D2 domains of the large subunit of the rRNA gene, respectively. The species is heterothallic and forms asci with one to two hat-shaped ascospores. The name Yamadazyma riverae sp. nov. is proposed for the novel species. The type strain is UFMG-CM-Y444T ( = CBS 14121T) and the allotype strain is TT12 ( = CBS 14098 = UFMG-CM-Y577). The Mycobank number is MB 813221.