The Indo-Pacific labrid fish genus Paracheilinus now contains 20 species. Most of the currently known species inhabit the mega-diverse East Indian region including Paracheilinusangulatus, P. carpenteri, P. cyaneus, P. filamentosus, P. flavianalis, P. lineopunctatus, P. nursalim, P. rennyae, P. togeanensis, P. walton, as well as three recent discoveries described as new species herein. In addition to the new species descriptions, a diagnosis and color illustrations are included for all members of the genus. We also present a key to the species and a neighbor-joining tree of mitochondrial DNA sequences which clarifies the genetic relationships among species, revealing four discrete species complexes within the genus.