Combined “total evidence” analysis of molecular and morphological data offers the opportunity to objectively merge fossils into the tree of life, and challenges the primacy of solely DNA based phylogenetic and dating inference, even among modern taxa. To investigate the relative utility of DNA, morphology, and total evidence for evolutionary inference, we sequenced the first near-complete mitochondrial genomes from extinct Australian megafauna: a 40-50 thousand year old giant short-faced kangaroo (Simosthenurus occidentalis) and giant wallaby (Protemnodon anak). We analysed the ancient DNA and fossil data alongside comparable data from extant species to infer phylogeny, divergence times, and ancestral body mass among macropods (kangaroos and wallabies). Our results confirm a close relationship between Protemnodon and the iconic kangaroo genus complex “Macropus”, and unite the giant Simothenurus with the hare-sized Lagostrophus fasciatus (banded hare-wallaby), suggesting that the latter is the closest living link to the once diverse sthenurine kangaroo radiation. We find that large body size evolved multiple times among kangaroos, coincident with expansion of open woodland habitats beginning in the Late Miocene. In addition, our results suggest that morphological data mislead macropod phylogeny reconstruction and in turn can distort total evidence estimation of divergence dates. However, a novel result with potentially broad application is that the accuracy and precision of reconstructing ancestral body mass was improved by tracing body mass on morphological branch lengths. This is likely due to positive allometric correlation between morphological and body size variation – a relationship that may be masked or even misleadingly inverted with the temporal or molecular branch lengths that typically underpin ancestral body size reconstruction. Our study supports complementary roles for DNA and morphology in evolutionary inference, and opens a new window into the evolution of Australia’s unique marsupial fauna.