Phylogenetic relationships were reconstructed for salamanders of the plethodontid subfamily Desmognathinae to examine evolution of morphology, ecology, and life history. Mitochondrial DNA sequences encoding 12S and 16S ribosomal RNA and the valine transfer RNA provided 259 phylogenetically informative sites from approximately 1,200 nucleotide positions for 21 specimens representing 15 species and subspecies. These data were analyzed in conjunction with 13 morphological and reproductive characters to generate phylogenetic hypotheses. The directly developing terrestrial desmognathines Phaeognathus hubrichti and Desmognathus wrighti represent, respectively, the first and second phylogenetic branching events within the subfamily, and the remaining terrestrial lineage, D. aeneus, also branches near the base of the phylogenetic tree. These results challenge earlier hypotheses that within Desmognathus the small nonmetamorphosing species, D. aeneus and D. wrighti, represent the end of a graded phylogenetic decrease in size and decrease in use of aquatic habitats. In contrast to previous hypotheses, our results suggest that desmognathine evolution includes transformations in the direction of larger body sizes, lengthened larval periods, and greater use of aquatic habitats.