We clarified the identity and nomenclature of Polystachya masayensis. A new combination is proposed, Polystachya elatior, to recognize at the species level the previously described P. masayensis var. elatior. This taxon features a central lobe of the labellum that is longer than wide, as opposed to the broader than long midlobe of P. masayensis. The taxonomic rearrangement includes the placement of P. cavanayensis into the synonymy of P. masayensis. Both species are sympatric in Central America and they have been confused and identified as P. masayensis throughout the taxonomic literature and in herbaria; however, they are easily recognized based on their labellum structure. We also included a drawing depicting labellum outlines for both species and a key for the identification of the Central American species of the genus.