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A molecular phylogenetic analysis of 132 octocoral species reveals a close relationship between specimens collected from the intertidal pools of the Datan Algal Reef, Taoyuan, Taiwan, and Erythropodium caribaeorum (Duchassaing & Michelotti, 1860), but the two species have distinct morphological features. On the basis of morphological differences in polyps and sclerites, we identify and describe a new Erythropodium species: E. taoyuanensis sp. nov. The distinct identifying features of E. taoyuanensis sp. nov. include the upright contractile polyps from thin encrusting membranes and abundant 6-radiate sclerites. Using an integrative approach, we present the findings of morphological comparisons and molecular phylogenetic analyses to demonstrate that E. taoyuanensis sp. nov. is distinct from other Erythropodium species. Our study contributes to the knowledge of octocoral biodiversity in marginal habitats.