The Macrostomorpha—an early branching and species-rich clade of free-living flatworms—is attracting interest because it contains Macrostomum lignano, a versatile model organism increasingly used in evolutionary, developmental, and molecular biology. We elucidate the macrostomorphan molecular phylogeny inferred from both nuclear (18S and 28S rDNA) and mitochondrial (16S rDNA and COI) marker genes from 40 representatives. Although our phylogeny does not recover the Macrostomorpha as a statistically supported monophyletic grouping, it (i) confirms many taxa previously proposed based on morphological evidence, (ii) permits the first placement of many families and genera, and (iii) reveals a number of unexpected placements. Specifically, Myozona and Bradynectes are outside the three classic families (Macrostomidae, Microstomidae and Dolichomacrostomidae) and the asexually fissioning Myomacrostomum belongs to a new subfamily, the Myozonariinae nov. subfam. (Dolichomacrostomidae), rather than diverging early. While this represents the first evidence for asexuality among the Dolichomacrostomidae, we show that fissioning also occurs in another Myozonariinae, Myozonaria fissipara nov. sp. Together with the placement of the (also fissioning) Microstomidae, namely as the sister taxon of Dolichomacrostomidae, this suggests that fissioning is not basal within the Macrostomorpha, but rather restricted to the new taxon Dolichomicrostomida (Dolichomacrostomidae + Microstomidae). Furthermore, our phylogeny allows new insights into the evolution of the reproductive system, as ancestral state reconstructions reveal convergent evolution of gonads, and male and female genitalia. Finally, the convergent evolution of sperm storage organs in the female genitalia appears to be linked to the widespread occurrence of hypodermic insemination among the Macrostomorpha.