The Neotropical cichlid genus Gymnogeophagus Ribeiro, 1918 is revised. The following species are considered valid and are redescribed: G. rhabdotus (Hensel, 1870), G. gymnogenys (Hensel, 1870), G. labiatus (Hensel, 1870), G. balzanii (Perugia, 1891) and G. australis (Eigenmann, 1907). In addition, two new species are described: G. lacustris, sp. n., from the coastal region of southern Brazil and G. meridionalis, sp. n., from the lower Rio Paraná and Rio Uruguay systems. Lectotypes are designated for Geophagus bucephalus Hensel, 1870 (= G. labiatus) and Geophagus scymnophilus Hensel, 1870 (= G. labiatus) and the phylogenetic relationships among the species are analyzed. An osteological description based mainly on G. meridionalis is presented. A map of species distribution and a key to the species are provided.