ABSTRACT Malassezia is a fungal genus found on the skin of humans and warm-blooded animals, with 18 species reported to date. In this study, we sequenced and annotated the genome of Malassezia arunalokei, which is the most recently identified Malassezia species, and compared it with Malassezia restricta, the predominant isolate from human skin. Additionally, we reanalyzed previously reported mycobiome data sets with a species-level resolution to investigate M. arunalokei distribution within the mycobiota of human facial skin. We discovered that the M. arunalokei genome is 7.24 Mbp in size and encodes 4,117 protein-coding genes, all of which were clustered with M. restricta. We also found that the average nucleotide identity value of the M. arunalokei genome was 93.5, compared with the genomes of three M. restricta strains, including M. restricta KCTC 27527. Our findings demonstrate that they indeed belong to different species and that M. arunalokei may have experienced specific gene loss events during speciation. Furthermore, our study showed that M. arunalokei was diverged from M. restricta approximately 7.1 million years ago and indicated that M. arunalokei is the most recently diverged species in the Malassezia lineage to date. Finally, our analysis of the facial mycobiome of previously recruited cohorts revealed that M. arunalokei abundance is not associated with seborrheic dermatitis/dandruff or acne, but was revealed to be more abundant on the forehead and cheek than on the scalp. IMPORTANCE Malassezia is the fungus predominantly residing on the human skin and causes various skin diseases, including seborrheic dermatitis and dandruff. To date, 18 species have been reported, and among them, M. restricta is the most predominant on human skin, especially on the scalp. In this study, we sequenced and analyzed the genome of M. arunalokei, which is the most recently identified Malassezia species, and compared it with M. restricta. Moreover, we analyzed the fungal microbiome to investigate the M. arunalokei distribution on human facial skin. We found that M. arunalokei may have experienced specific gene loss events during speciation. Our study also showed that M. arunalokei was diverged from M. restricta approximately 7.1 million years ago and indicated that M. arunalokei is the most recently diverged species in the Malassezia lineage. Finally, our analysis of the facial mycobiome revealed that M. arunalokei has higher relative abundance on the forehead and cheek than the scalp.