Half of all vertebrate species are teleost fish. What accounts for this explosion of biodiversity? Recent evidence and advances in evolutionary theory suggest that genomic features could have played a significant role in the teleost radiation. This review examines evidence for an ancient whole-genome duplication (tetraploidization) event that probably occurred just before the teleost radiation. The partitioning of ancestral subfunctions between gene copies arising from this duplication could have contributed to the genetic isolation of populations, to lineage-specific diversification of developmental programs, and ultimately to phenotypic variation among teleost fish. Beyond its importance for understanding mechanisms that generate biodiversity, the partitioning of subfunctions between teleost co-orthologs of human genes can facilitate the identification of tissue-specific conserved noncoding regions and can simplify the analysis of ancestral gene functions obscured by pleiotropy or haploinsufficiency. Applying these principles on a genomic scale can accelerate the functional annotation of the human genome and understanding of the roles of human genes in health and disease.