During the past decade, ancient gene duplications were recognized as one of the main forces in the generation of diverse gene families and the creation of new functional capabilities. New tools developed to search data banks for homologous sequences, and an increased availability of reliable three-dimensional structural information led to the recognition that proteins with diverse functions can belong to the same superfamily. Analyses of the evolution of these superfamilies promises to provide insights into early evolution but are complicated by several important evolutionary processes. Horizontal transfer of genes can lead to a vertical spread of innovations among organisms, therefore finding a certain property in some descendants of an ancestor does not guarantee that it was present in that ancestor. Complete or partial gene conversion between duplicated genes can yield phylogenetic trees with several, apparently independent gene duplications, suggesting an often surprising parallelism in the evolution of independent lineages. Additionally, the breakup of domains within a protein and the fusion of domains into multifunctional proteins makes the delineation of superfamilies a task that remains difficult to automate.