The genus Micropsalliota is reported for the first time from Pakistan, with two new species identified through morphology and combined ITS-LSU (internal transcribed spacer-larger subunit) molecular phylogenetics. Micropsalliota pakistanica sp. nov., collected from Swabi district (humid subtropical climate) is characterised by a white plano-convex pileus, free brownish lamellae, oblong to amygdaliform basidiospores, and tibiiform, capitate, subhypoid, rarely forked, apex capitate, rarely mucronate, cheilocystidia. Micropsalliota roseus sp. nov., from Mandi bahauddin district (hot semi-arid climate), features a dark reddish-brown, slightly umbonate pileus with cracked patches, amygdaliform to oblong basidiospores, and capitate cheilocystidia. The discovery of these two new species enhances our understanding of fungal diversity in Pakistan and highlights the importance of conserving natural ecosystems. Coloured photographs of fresh basidiomata, illustrations of key anatomical characters, detailed descriptions, phylogenetic tree, and notes are also provided.