An important mechanism for the evolution of phenotypic complexity, diversity and innovation, and the origin of novel gene functions is the duplication of genes and entire genomes. Recent phylogenomic studies suggest that, during the evolution of vertebrates, the entire genome was duplicated in two rounds (2R) of duplication. Later, ∼350 mya, in the stem lineage of ray-finned (actinopterygian) fishes, but not in that of the land vertebrates, a third genome duplication occurred—the fish-specific genome duplication (FSGD or 3R), leading, at least initially, to up to eight copies of the ancestral deuterostome genome. Therefore, the sarcopterygian (lobe-finned fishes and tetrapods) genome possessed originally only half as many genes compared to the derived fishes, just like the most-basal and species-poor lineages of extant fishes that diverged from the fish stem lineage before the 3R duplication. Most duplicated genes were secondarily lost, yet some evolved new functions. The genomic complexity of the teleosts might be the reason for their evolutionary success and astounding biological diversity. BioEssays 27:937–945, 2005. © 2005 Wiley Periodicals, Inc.