A new goatfish, Upeneus torres sp. nov. (Mullidae), is described based on 27 specimens from Australia and Vanuatu using a diversified alpha-taxonomy approach that integrates species, population and size-related allometric differences. Based on large sets of comparative morphological and colour data, diagnoses and inter- and intraspecific comparisons are provided for similar and/or co-occurring species of the so-called japonicus species group, Upeneus torres sp. nov., U. australiae, U. guttatus, and U. japonicus. The new species can be distinguished from all congeneric species by the following combination of characters: seven spines in the first dorsal fin; 13–15 (typically 14) pectoral-fin rays, 22–25 total gill rakers, barbel length 24–28 %SL, and pectoral-fin length 24–26 %SL. Fish smaller than 65 mm SL (‘subadults’) of the new species differ from larger conspecifics (‘adults’) in shallower body, larger eyes, longer anal-fin base, and longer caudal fin. Similar size-related differences were also found for the three other species. Phenotypic population differences in the new species as well as in U. guttatus are reported that may reflect character displacement in the latter. The need to study size–depth–habitat relationships in more detail, the phylogeography of individual populations, and the overall diversity of the genus Upeneus from Australian waters is discussed.