The kinorhynch fauna from Portugal has been explored, yielding a new species of the genus Setaphyes (Kinorhyncha: Allomalorhagida). This is the first description of an allomalorhagid species from Portugal. Specimens of the new species were collected at a subtidal muddy beach in Alvor, a village located in the southernmost region of Portugal. Setaphyes algarvensis sp. nov. may be distinguished from its congeners by a unique arrangement of the setae: paired paradorsal setae on segments 2-7 and 9, paradorsal seta on segment 8 unpaired, laterodorsal setae on segments 2-3 and 6-9 in males and 2-9 in females, paralateral setae on segment 1, lateroventral setae on segments 2-10 (two pairs on segment 5), ventrolateral setae on segment 1 in males and 1-3 in females, and ventromedial setae on segments 3-9 in males and 4-9 in females. The diagnostic features of Setaphyes algarvensis sp. nov. are discussed from a comparative perspective with the congener species. Additionally, morphometric analyses of selected features, namely the total trunk length and the relation between the total trunk length and the length of lateral terminal spines, turned out to be useful to distinguish between the new species and Setaphyes kielensis (its most similar congener).