SUMMARY Insight into the origin and early evolution of the animal phyla requires an understanding of how animal groups are related to one another. Thus, we set out to explore animal phylogeny by analyzing with maximum parsimony 138 morphological characters from 40 metazoan groups, and 304 18S rDNA sequences, both separately and together. Both types of data agree that arthropods are not closely related to annelids: the former group with nematodes and other molting animals (Ecdysozoa), and the latter group with molluscs and other taxa with spiral cleavage. Furthermore, neither brachiopods nor chaetognaths group with deuterostomes; brachiopods are allied with the molluscs and annelids (Lophotrochozoa), whereas chaetognaths are allied with the ecdysozoans. The major discordance between the two types of data concerns the rooting of the bilaterians, and the bilaterian sister-taxon. Morphology suggests that the root is between deuterostomes and protostomes, with ctenophores the bilaterian sister-group, whereas 18S rDNA suggests that the root is within the Lophotrochozoa with acoel flatworms and gnathostomulids as basal bilaterians, and with cnidarians the bilaterian sister-group. We suggest that this basal position of acoels and gnathostomulids is artifactal because for 1000 replicate phylogenetic analyses with one random sequence as outgroup, the majority root with an acoel flatworm or gnathostomulid as the basal ingroup lineage. When these problematic taxa are eliminated from the matrix, the combined analysis suggests that the root lies between the deuterostomes and protostomes, and Ctenophora is the bilaterian sister-group. We suggest that because chaetognaths and lophophorates, taxa traditionally allied with deuterostomes, occupy basal positions within their respective protostomian clades, deuterostomy most likely represents a suite of characters plesiomorphic for bilaterians.