A new species of Apistogramma is described from Peru, based on a total of 51 specimens collected in small forest brooks in and around the Reserva Nacional Allpahuayo Mishana in the drainage of the Nanay river basin about 30 kilometres southwest of Iquitos, Departamento Loreto (approximately 73° 25' W/03° 59' S). Apistogramma allpahuayo sp. n. is distinguished from all other Apistogramma species by the combination of black w-shape marking on lower jaw, (in adult males) lyrate caudal fin, massive jaws and hypertrophied orange lips, distinct roundish caudal-peduncle spot clearly separated from lateral band ending at vertical bar 7, serrated dorsal fin with conspicuous extensions of first membranes, and proportions of dorsal-fin spines differing from those otherwise typical within genus. Apistogramma allpahuayo sp. n. is thought to be a representative of the Apistogramma cacatuoides complex within the Apistogramma cacatuoides lineage.