Arthropods are the most diverse group of animals and have been so since the Cambrian radiation. They belong to the protostome clade Ecdysozoa, with Onychophora (velvet worms) as their most likely sister group and tardigrades (water bears) the next closest relative. The arthropod tree of life can be interpreted as a five-taxon network, containing Pycnogonida, Euchelicerata, Myriapoda, Crustacea, and Hexapoda, the last two forming the clade Tetraconata or Pancrustacea. The unrooted relationship of Tetraconata to the three other lineages is well established, but of three possible rooting positions the Mandibulata hypothesis receives the most support. Novel approaches to studying anatomy with noninvasive three-dimensional reconstruction techniques, the application of these techniques to new and old fossils, and the so-called next-generation sequencing techniques are at the forefront of understanding arthropod relationships. Cambrian fossils assigned to the arthropod stem group inform on the origin of arthropod characters from a lobopodian ancestry. Monophyly of Pycnogonida, Euchelicerata, Myriapoda, Tetraconata, and Hexapoda is well supported, but the interrelationships of arachnid orders and the details of crustacean paraphyly with respect to Hexapoda remain the major unsolved phylogenetic problems.