A new species of alkali grass, Puccinellia banksiensis Consaul from Banks Island, Northwest Territories, in the Canadian Arctic, is described and illustrated. This diploid species is most similar to the Russian and Alaskan tetraploid P. hauptiana (Trinius ex V. I. Krecznetowicz) Kitagawa, from which it differs by having dense panicles with erect branches and palea keels with curly hairs in the proximal half; to the Siberian species P. neglecta (Tzvelev) Bubnova, which is larger with less dense inflorescences and wider leaves; and to the circumpolar hexaploid P. angustata (R. Br.) E. L. Rand & Redfield, from which it differs by having smaller spikelets and florets. It differs from other Puccinellia Parlatore species on Banks Island and the northern coast of Alaska by having lemmas shorter than 2.7 mm with scabrous apical margins and anthers shorter than 0.9 mm. Although morphology suggests a close relationship with P. angustata, P. hauptiana, and P. neglecta, genetic evidence suggests it is a distinct species. It is local and rare, and grows in low-elevation, Dryas L.–dominated tundra beside coastal lakes.