Fotolaimus cavus sp. nov. was described from a submarine anchialine cave called Akuma-no-yakata on the Shimoji Island, Miyako Island Group, Ryukyu Islands, southwestern Japan. This is the first free-living marine nematode isolated from a submarine cave in Japan, and the third species of the genus Fotolaimus. This new species differs from its congeners by its small body size, wide amphids, long buccal cavity, long conico-cylindrical tail, and proximally curved gubernaculum. We provide amended dichotomous keys to genera in the subfamily Oncholaiminae and species in Fotolaimus. We also analyzed partial DNA sequences encoding ribosomal small subunit RNA and cytochrome c oxidase subunit I from Fotolaimus cavus sp. nov. and six other species of Oncholaimidae collected from Japanese waters. The phylogenetic tree based on the ribosomal small subunit RNA sequences using maximum likelihood analysis suggested a close relationship between Fotolaimus and Wiesoncholaimus as well as Oncholaimus. The topology of the tree was similar to those from previous studies; however, it suggested a new phylogenetic position of Adoncholaimus as a sister clade for Viscosia and Oncholaimus.