Neolamprologus timidus, new species, is described from Ulwile Island and adjacent localities on the Tanzanian coast of Lake Tanganyika. The species was observed or collected along about 100 km of coastline from KolwePoint, Cape Mpimbwe, south to Kisi Island. It is distinguished from the most similar species, N. furcifer, by presenceof scales on most of the cheek, long pectoral fin and pelvic fin with the second ray longer than the first. Neolamprologus timidus is sympatric with N. furcifer at Kolwe Point and south to Kampempa Point, and at Lupitaand Ulwile Islands south to Kisi Island, but N. furcifer is otherwise absent from the range of N. timidus. Two morphologically distinct forms are recognized in N. furcifer. Samples of N. furcifer from Ulwile Island and slightly more southern localities possess a caudal fin with rounded lobes and long middle rays, appearing onlyslightly emarginate. Samples of N. furcifer from Udachi and nearby localities possess pointed caudal-fin lobeswith greatly elongated streamers, similar to N. timidus and to N. furcifer from other parts of Lake Tanganyika, including the type specimens from the southern part of the lake. The variation in caudal-fin shape may be an expression of character displacement as it occurs in the area of sympatry between N. timidus and N. furcifer. MitochondrialDNA sequences are nearly identical in samples of N. furcifer with pointed or rounded caudal fin. A molecular phylogenetic analysis of a large set of lamprologin cichlids using two mitochondrial genes corroborates earlier analyses and places N. furcifer and N. timidus in different clades with different species of Neolamprologus, Julidochromis, Chalinochromis, and Telmatochromis despite sharing a unique combination of fin and bodyshape, and colour pattern. A 4648 base-pair multiloci analysis of a smaller number of species using fragments ofthree mitochondrial and two nuclear genes resolves N. furcifer and N. timidus in sister clades, but the N. timidus clade also includes Telmatochromis brachygnathus, and N. furcifer is sister species of Chalinochromis brichardi.