Galls induced by the larval stage of cecidosids (Lepidoptera: Cecidosidae) are complex, multi-trophic systems, still poorly studied. They may be associated with other insect feeding guilds, including inquilines, kleptoparasites, cecidophages, parasitoids, and predators. By causing death of the gall inducer early in life and altering the gall phenotype, inquilines may lead to misidentification of the true gall inducers. Here, we describe through light and scanning electron microscopy Cecidonius pampeanus, a new genus and species of cecidosid moth, from the Pampa biome, south Brazil. It induces unnoticed, small galls under swollen stems of Schinus weinmannifolius Mart. ex Engl. (Anacardiaceae). Such galls are severely attacked early in ontogeny either by unidentified parasitoids belonging to Lyrcus Walker (Pteromalidae) that feed upon the inducer, or by inquiline wasps of the genus Allorhogas Gahan (Braconidae). The inquilines modify the galls into large ones that last longer and promptly call attention. Free-living galls are rare and dehiscent, pupation of C. pampeanus occurring on the ground. Due to these reasons the true inducer has been overlooked in this case for more than a century. Additionally we inferred a phylogeny for Cecidosidae using sequences from mitochondrial and nuclear loci, and characterized genetic variation and gene flow across ten populations. Despite its natural history similarities with the African genus Scyrotis, Cecidonius is a much younger lineage, more closely related to the Neotropical cecidosids. C. pampeanus populations, which are now confined to a few mountain areas within its distribution range due to habitat destruction, are also genetically isolated, requiring conservation measures.