The phylogenetic relationships of the Fungiidae, a family of predominantly free-living, zooxanthellate, reef corals, were studied by sequencing a part of the mitochondrial Cytochrome Oxidase I (COI) and the complete ribosomal Internal Transcribed Spacers (ITS) I & II of specimens from various locations in the Indo-West Pacific. Some sequences were retrieved by using fungiid-specific primers on DNA-extracts from parasitic gastropods living with these corals. The analyses were performed both including and excluding intraspecific variation to investigate the potential effect of saturation. Even though the present molecular phylogeny reconstructions largely reflect those based on morphological characters, there are some distinct differences. Three major clades are distinguished, one of which consists of species with relatively long tentacles. The two other major clades cannot yet be clearly separated from each other morphologically. Several polyphyletic taxa were detected and some genera and species that previously were considered closely related to each other, appear not to be so. Proposed nomenclatorial changes include amongst others the upgrading of subgenera in Fungia to genus level. A few species moved from one genus to another. Among all Fungiidae, the loss of the ability to become free-living appears to have evolved independently as reversals in four separate clades, including two that were previously assumed to be sister groups. The evolution of corals with additional (secondary) mouths leading to polystomatous growth forms from corals with only a single primary mouth (monostomatous growth form) appears to have occurred independently ten times: seven times by extrastomatal budding and three times by intrastomatal budding. In two clades, Herpolitha and Polyphyllia, both mechanisms co-evolved. In general there is no clear relationship between the loss of a free-living phase and the evolution of multiple mouths.