Parupeneus margaritatus n. sp. is described from specimens from the Persian Gulf and Gulf of Oman and one specimen allegedly from Madras on the east coast of India. It is distinctive in having a moderately elongate body (depth 3.5-4.35 in SL), long snout (1.75-3.0 in head), small mouth (upper jaw 1.4-1.95 in snout), relatively short barbells (1.45-1.65 in head), 29-33 gill rakers, and a colour pattern in life of a pale spot on each scale along lower side of body and a large white-saddle-like spot anteriorly on caudal peduncle. It has been confused with Parupeneus rubescens (Lacepède) (usually identified as P. pleurotaneia, P. dispilurus, or P. fraterculus) from which it differs in the more slender body (depth of rubescens 3.0 to 3.4 in SL), longer snout and smaller mouth (upper jaw of rubescens 1.2 to 1.5 in snout), and colour (rubescens has a prominent dark saddle-like spot on caudal peduncle adjacent and posterior to a white one, and it lacks the small pale spots on the body. P. margaritatus is a small species; the largest examined is 182.5 mm SL, whereas the largest P. rubescens measures 362 mm SL.