The Alpheus websteri Kingsley, 1880 species complex is revised. Alpheus websteri s. str. is redefined and restricted to the western Atlantic, ranging from the type locality in the Florida Keys to northeastern Brazil. The eastern Pacific A. arenensis (Chace, 1937), formerly a synonym of A. websteri, and the eastern Atlantic A. fagei Crosnier and Forest, 1966, are shown to be distinct from A. websteri morphologically, genetically and also by color pattern. Morphology, genetics and color patterns all suggest that A. websteri and A. arenensis are transisthmian sister species, with A. fagei being their closest relative. Complete synonymy, color photographs and GenBank barcodes (COI) are provided for all three species.