A new species of Mallocybe is described and illustrated based on material collected near the vicinity of Pinus wallichiana in mixed conifer forests in district Abbottabad, Khyber Pakhtoonkhaw, Pakistan. Mallocybe velutina is recognized by the presence of moderate yellow to light yellow pileal margin with deep yellow or fulvous pileus center; strikingly velvety pileus surface; subdistant moderate yellow lamellae; subphaseoliform to ellipsoid basidiospores, clavate to cylindrical cheilocystidia and an ecological association with Pinaceae. The internal transcribed spacer region (ITS) and large subunit of the nuclear ribosomal RNA gene (nrLSU) were used for the delimitation of this species based on sequence data. The evolutionary relationships of M. velutina with other closely related species of Mallocybe were inferred by means of maximum likelihood and maximum parsimony of concatenated ITS + nrLSU dataset. Mallocybe velutina is most closely related to M. arenaria, M. heimii and M. tomentosula.