The evolution of carnivorous fungi in deep time is still poorly understood as their fossil record is scarce. The approximately 100-million-year-old Cretaceous Palaeoanellus dimorphus is the earliest fossil of carnivorous fungi ever discovered. However, its accuracy and ancestral position has been widely questioned because no similar species have been found in modern ecosystems. During a survey of carnivorous fungi in Yunnan, China, two fungal isolates strongly morphologically resembling P. dimorphus were discovered and identified as a new species of Arthrobotrys (Orbiliaceae, Orbiliomycetes), a modern genus of carnivorous fungi. Phylogenetically, Arthrobotrys blastospora sp. nov. forms a sister lineage to A. oligospora. A. blastospora catches nematodes with adhesive networks and produces yeast-like blastospores. This character combination is absent in all other previously known modern carnivorous fungi but is strikingly similar to the Cretaceous P. dimorphus. In this paper, we describe A. blastospora in detail and discuss its relationship to P. dimorphus.