The number of species of the goatfish genus Upeneus from the western Indian Ocean has increased considerably due to recent taxonomic efforts. Here we describe a new species, Upeneus randalli n. sp., based on body and fin coloration and 50 morphometric and meristic characters of eight specimens from the Persian Gulf, and supported by comparative data from a taxonomic review of western Indian Ocean Upeneus species and additional material from collections. Upeneus randalli is distinguished from congeners by the combination of 8 dorsal-fin spines, 14 pectoral-fin rays, 23 to 25 gill rakers, 28 to 30 lateral-line scales, pectoral-fin width 22 to 26 times in SL, and red bars on both caudal-fin lobes. We provide two identification keys: one key is for distinguishing among four species groups and the morphologically unique U. filifer, accounting for all 28 species of the genus, and the other key is for the six closely related species of the “U. tragula group” from the western Indian Ocean, including U. randalli n. sp. Since the colour patterns fade away soon after collection and can be completely lost during preservation, morphometric and meristic characters are important for correctly identifying U. randalli n. sp. and the closely related U. margarethae. The latter species shows considerable variation in body form in different areas of the western Indian Ocean. We discuss the significance of detailed comparative studies of caudal-fin colour patterns and body-form characters for obtaining a deeper understanding of inter- and intraspecific diversity among Upeneus.