The internal transcribed spacers and 5.8S cistron of nuclear ribosomal DNA were sequenced from 22 species of Epilobium and two outgroups. Phylogenies were inferred from the sequences using parsimony, neighbor-joining, maximum-likelihood, and compatibility analysis. With parsimony we explored the effect of different weights for insertions/deletions (indels) vs. substitutions, coding vs. non-coding regions, transitions vs. transversions, and a posteriori character reweighting. Section Chamaenerion was found to be sister to the rest of the genus. The remainder of Epilobium fell into two main clades: 1) sect. Epilobium, and 2) the "xerophytic" clade, which comprises the remaining six sections. The unusual species E. rigidum (sect. Epilobium) had an uncertain position, appearing either at the base of sect. Epilobium, the base of the "xerophytic" clade, or as sister to the entire genus except sect. Chamaenerion. Within the "xerophytic" clade, relationships were incompletely resolved but a monophyletic group consisting of the annual sects. Boisduvalia and Currania (both formerly constituting the genus Boisduvalia) and the perennial, hummingbird-pollinated sect. Zauschneria was supported. The molecular phylogeny is compatible with some important independent characters and is useful for interpreting morphological and cytological evolution in Epilobium.