Bamboo bats are a group of small bats with unique skull and morphology. They roost inside hollow bamboo stems in tropical and subtropical Asia and the Ambon Islands (Moluccas). We examined 53 specimens of Tylonycteris from southern and southwestern China. Comparisons of skull and external characteristics, pelage color, shapes of thumbpads and footpads, and statistical analysis of cranial measurements revealed that specimens from Damenglong, Jinghong County, Xishuangbanna, Yunnan, are distinctly different from the other two species of Tylonycteris described so far. The Yunnan specimens are the smallest in size; have dark blackish brown pelage color; and have larger upper premolars, smaller first lower premolars, and longer C-M³. They are sympatric with the previously described species. Here we review the genus Tylonycteri and describe a new species, Tylonycteris pygmaeus, from the Yunnan material.