The Order Stolidobranchiata comprises the families Pyuridae, Styelidae and Molgulidae. Early molecular data was consistent with monophyly of the Stolidobranchiata and also the Molgulidae. Internal phylogeny and relationships between Styelidae and Pyuridae were inconclusive however. In order to clarify these points we used mitochondrial and nuclear sequences from 31 species of Styelidae and 25 of Pyuridae. Phylogenetic trees recovered the Pyuridae as a monophyletic clade, and their genera appeared as monophyletic with the exception of Pyura. The Styelidae, on the other hand, appeared as a paraphyletic group split into several clades. One of them was formed by solitary oviparous species, of which the Pyuridae were a sister group. A second clade included the colonial genera Botryllus, Botrylloides and Symplegma. The remaining colonial and solitary genera formed several poorly resolved clades. One of the more species genus, Polycarpa, was shown to be polyphyletic, and the species Styela plicata grouped into two genetically distant clades suggesting the existence of two cryptic species. The internal phylogeny of Styelidae has bearings on the origin of coloniality in this family. We suggest to abandon the traditional division of colonial forms into social and compound species and use instead the categories of aggregated colonies that do not have common vascular systems, and integrated colonies, that do possess such systems. Our molecular results indicate that there have been several independent acquisitions of coloniality in the Styelidae, and that viviparity may be a pre-adaptation for a colonial life-style.