Agaricus section Xanthodermatei comprises a group of species allied to A. xanthodermus and generally characterized by basidiomata having phenolic odors, transiently yellowing discolorations in some parts of the basidiome, Schaeffer's reaction negative, and mild to substantial toxicity. The section has a global distribution, while most included species have distributions restricted to regions of single continents. Using specimens and cultures from Europe, North America, and Hawaii, we analyzed DNA sequences from the ITS1+2 region of the nuclear rDNA to identify and characterize phylogenetically distinct entities and to construct a hypothesis of relationships, both among members of the section and with representative taxa from other sections of the genus. 61 sequences from affiliated taxa, plus 20 from six (or seven) other sections of Agaricus, and one Micropsalliota sequence, were evaluated under distance, maximum parsimony and maximum likelihood methods. We recognized 21 discrete entities in Xanthodermatei, including 14 established species and 7 new ones, three of which are described elsewhere. Four species from California, New Mexico, and France deserve further study before they are described. Type studies of American taxa are particularly emphasized, and a lectotype is designated for A. californicus. Section Xanthodermatei formed a single clade in most analyses, indicating that the traditional sectional characters noted above are good unifying characters that appear to have arisen only once within Agaricus. Deep divisions within the sequence-derived structure of the section could be interpreted as subsections in Xanthodermatei; however, various considerations led us to refrain from proposing new supraspecific taxa. The nearest neighbors of section Xanthodermatei are putatively in section Duploannulati.