This is the third arthroconidial-producing agaric discovered for the genus Arthromyces found in the neotropics. Arthromyces pulverulentus from the cloud forests of Colombia is described and illustrated. The new species can be distinguished from other members of the genus Arthromyces by its thick mycelioid roll around the margin of the pileus that produces copious amounts of smooth phaeoarthrospores. This newly discovered species, like other members of the genus, is associated with insect-faecal pellet masses of an unidentified insect.