Molecular phylogenies support a common ancestry between animals (Metazoa) and Fungi, but the evolutionary descent of the Metazoa from single-celled eukaryotes (protists) and the nature and taxonomic affiliation of these ancestral protists remain elusive. We addressed this question by sequencing complete mitochondrial genomes from taxonomically diverse protists to generate a large body of molecular data for phylogenetic analyses. Trees inferred from multiple concatenated mitochondrial protein sequences demonstrate that animals are specifically affiliated with two morphologically dissimilar unicellular protist taxa: Monosiga brevicollis (Choanoflagellata), a flagellate, and Amoebidium parasiticum (Ichthyosporea), a fungus-like organism. Statistical evaluation of competing evolutionary hypotheses confirms beyond a doubt that Choanoflagellata and multicellular animals share a close sister group relationship, originally proposed more than a century ago on morphological grounds. For the first time, our trees convincingly resolve the currently controversial phylogenetic position of the Ichthyosporea, which the trees place basal to Choanoflagellata and Metazoa but after the divergence of Fungi. Considering these results, we propose the new taxonomic group Holozoa, comprising Ichthyosporea, Choanoflagellata, and Metazoa. Our findings provide insight into the nature of the animal ancestor and have broad implications for our understanding of the evolutionary transition from unicellular protists to multicellular animals.