The diversity of pendulous Usnea species in tropical South America (Bolivia, Brazil, Colombia, Ecuador, Paraguay, Peru and Venezuela) and the Galapagos Islands is discussed with reference to 23 species. Usnea crenulata Truong & Clerc is newly described. Usnea articulata, U. deformis, U. dimorpha, U. geissleriana, U. merrillii, U. perhispidella, U. sanctaeritae, U. subflammea and U. transitoria are newly reported for South America. Modern descriptions are provided for Usnea amabilis, U. arthroclada, U. dodgei, U. humboldtii and U. regia. We propose to reject the synonymy of U. hesperina with U. schadenbergiana, and the valid name for U. hesperina is therefore U. subgracilis. Distinct patterns of unidentified triterpenoids have been detected by thin-layer chromatography and are used to characterize several species within this group. The morphology, branch anatomy, chemistry, ecology and distribution of each species are given, together with an identification key.