Damselfishes in the family Pomacentridae represent one of the few families of reef fishes found on coral reefs irrespective of location. At a local scale, damselfishes are often the most abundant coral reef fish, and their study has provided much of our current understanding of the ecology of tropical reef animals. The study of phylogenetic relationships among the Pomacentridae has lagged ecological investigation of the group, thus limiting historical perspective on the remarkable species richness of the family. In this study, we used 1989bp of DNA sequence representing three mitochondrial genes and 1500bp of the single copy nuclear RAG1 region to infer hypotheses of relationship for the group. Our analysis includes 103 Pomacentridae species in 18 genera, and three of the four named subfamilies: Amphriprioninae, Chrominae, and Pomacentrinae. The Bayesian method of phylogenetic reconstruction was applied to the data, because even with a large number of sequences it is an efficient means of analysis that provides intuitive measures of support for tree topologies and for the parameters of the nucleotide substitution model. Four Pomacentridae clades were identified with high statistical support whether the data were analyzed from a mtDNA, RAG1 or combined perspective, and in all analyses the current subfamilial classification of the Pomacentridae was rejected. At the genus level, Amphiprion, Chromis, and Chrysiptera were also rejected as natural groups. Abudefduf, Amblyglyphidodon, Dascyllus, Neoglyphidodon, Neopomacentrus, and Pomacentrus were each strongly supported as monophyletic genera but the support for monophyly is nonetheless compromised by sample size, except in the case of Dascyllus and Abudefduf for which we have sampled almost all of the described species.