Psychotria L. subg. Heteropsychotria Steyerm. (Rubiaceae) has been shown by morphological and molecular analyses to be polyphyletic. Most of its species, including its type, belong to Palicourea Aubl. Some of its species have previously been transferred to Palicourea, and several more are studied and transferred here. The species studied here are classified in a newly circumscribed group that includes the type of Palicourea sect. Bracteiflorae Borhidi and so takes that name but differs in circumscription from it. This new circumscription of Palicourea sect Bracteiflorae includes 51 species of shrubs and small trees found in wet vegetation from southern Mexico and the Antilles to Brazil and Bolivia, and is diagnosed by a combination of stipule, inflorescence, and fruit characters. Its center of diversity is now in the Andean region. Twelve previously described species are newly transferred to Palicourea here, and analysis here clarifies the identity and circumscription of several of these. The 23 species newly described here are documented from Colombia, Ecuador, and Peru. The replacement name Palicourea palenquensis C. M. Taylor is published for the species originally described as Cephaelis gentryi Dwyer. The newly described section Palicourea sect. Egenses C. M. Taylor includes the species of Palicourea sect. Bracteiflorae sensu Borhidi that are excluded from the present circumscription of that section.