Duplicated pseudogenes in the human genome are disabled copies of functioning parent genes. They result from block duplication events occurring throughout evolutionary history. Relatively recent duplications (with sequence similarity≥90% and length≥1 kb) are termed segmental duplications (SDs); here, we analyze the interrelationship of SDs and pseudogenes. We present a decision-tree approach to classify pseudogenes based on their (and their parents') characteristics in relation to SDs. The classification identifies 140 novel pseudogenes and makes possible improved annotation for the 3172 pseudogenes located in SDs. In particular, it reveals that many pseudogenes in SDs likely did not arise directly from parent genes, but are the result of a multi-step process. In these cases, the initial duplication or retrotransposition of a parent gene gives rise to a 'parent pseudogene', followed by further duplication creating duplicated-duplicated or duplicated-processed pseudogenes, respectively. Moreover, we can precisely identify these parent pseudogenes by overlap with ancestral SD loci. Finally, a comparison of nucleotide substitutions per site in a pseudogene with its surrounding SD region allows us to estimate the time difference between duplication and disablement events, and this suggests that most duplicated pseudogenes in SDs were likely disabled around the time of the original duplication.