A new argyrolagoid marsupial, Hondalagus altiplanensis n. gen., n. sp., from the middle Miocene (Santacrucian–Friasian) age locality of Quebrada Honda in southernmost Bolivia represents the smallest and most specialized member of the family Argyrolagidae known. The lower molars are hypselodont and lack vertical grooves labially and lingually, and M 4 is greatly reduced relative to M 3 . In overall size and structure, H. altiplanensis compares best with Microtragulus catamarcensis (Kraglievich, 1931) from rocks of late Miocene (Huayquerian) age in northwest Argentina. Hondalagus altiplanensis demonstrates that the adaptive radiation of argyrolagoids was much greater than previously envisioned, and that generic differentiation of known taxa occurred no later than early–middle Miocene time in South America.