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The lignicolous saprotrophic genus <i>Entonaema</i> contains six formally accepted species: <i>E. liquescens</i> (type species), <i>E. cinnabarinum</i>, <i>E. globosum</i>, <i>E. dengii</i>, <i>E. moluccanum</i>, and <i>E. siamensis</i>. Its stromatic ascomata develop on the surface of dead wood remnants; they are rather large, globose to irregularly shaped, and vividly coloured. The fresh stroma interior is filled with a liquid matter. In early studies, the genus was considered to have a preference for tropical habitats, while in more recent field research, numerous collections have been added from warm, temperate areas of Europe, North America, and Asia. Our taxonomic and phylogenetic studies were based on freshly collected <i>E. cinnabarinum</i> from Croatia and <i>E. liquescens</i> from the USA. A phylogenetic study of the sequence alignment of four concatenated gene regions (ITS, LSU, <i>rpb2</i>, and <i>β-tub</i>) revealed the true taxonomic position of <i>Entonaema</i> within <i>Hypoxylaceae</i> (<i>Xylariales</i>), a sister to <i>Hypoxylon carneum</i>. Detailed macroscopic and microscopic descriptions of <i>E. cinnabarinum</i> are accompanied by drawings and colour photographs, while the study of <i>E. liquescens</i> is focused on stromatal microchemical reaction. With new information, the worldwide identification key to the putative species of <i>Entonaema</i> is proposed. Ecological data and biogeographical patterns were studied using all available and reliable sources of recorded data. Climatic preferences of the two most widespread <i>Entonaema</i> species, <i>E. liquescens</i> and <i>E. cinnabarinum</i>, are discussed in detail.