The phylogenetic position of the recently extinct marsupial 'wolf', or thylacine (Thylacinus cynocephalus), has been a source of contention in mammalian systematics for nearly a century. Thylacines were endemic to Australasia, but possessed striking anatomical similarities to Oligo-Miocene borhyaenid marsupials of South America. At issue has been whether these features are indicative of common ancestry or convergent adaptation to carnivory. Recent morphological studies have supported both conclusions. Although current marsupial classifications group thylacines with Australian dasyuromorphians, this putative clade is characterized by mostly primitive morphological features. Attempts to determine thylacine affinities with ancient protein and DNA analyses have supported, but not resolved, a dasyuromorphian placement. We report 1546 bp of mitochondrial DNA sequence (from cytochrome b and 12S rRNA genes) and 841 bp of nuclear protamine gene sequence from the thylacine and representatives of all or most other marsupial orders. Phylogenetic analysis of these sequences shows unambiguously that thylacines are members of Dasyuromorphia, and suggests a late Oligocene or very early Miocene divergence of familial lineages.