Neosabellaria upopoy sp. nov. (Annelida: Polychaeta: Sabellariidae) is described based on specimens collected from shallow waters (7–10 m) off Iburi, Hokkaido, Japan. The tubes of the new species are constructed of sand granules and form aggregations extensive enough to cover a 20×20 m area of tandem artificial reefs made of concrete blocks and iron frames. Representatives of the new species were also found as solitary animals or living in small clumps on rocks adjacent to man-made structures covered with sand-worm aggregations. The new species is distinguished from other congeners by the structure of the middle and outer rows of opercular paleae. The middle row paleae appeared either as a shallow-cup type with moderately extended pointed tips or a long-spined type with long spatulate blades. This variation in the middle row paleal morphology is found among specimens from the same aggregation. The partial sequences of nuclear (18S and 28S) and mitochondrial (16S and COI) genes obtained from solitary and aggregated worms, which both show dimorphic paleal morphologies, were indistinguishable. Phylogenetic analyses revealed that the sequences obtained from the new Japanese species were distinguished from those of the closely related congener Neosabellaria cementarium from the Pacific coast of North America. The ecological (solitary vs gregarious settlement) and morphological (types of paleae) differences within N. upopoy sp. nov. populations were attributed to intra-specific variation. The early development of the new sabellariid, which reproduce year-round with a peak from early summer to autumn, is also described here.