The evolutionary history and classification of the palaemonid shrimps has been the subject of constant speculation and debate. At present, all major systematic treatments have been based on morphological characteristics. To help resolve the phylogenetic relationships, and thus enable the creation of a classification system that reflects evolutionary history, a region of the 16S mitochondrial rRNA gene was sequenced for a number of Australian Palaemonidae. The resulting phylogenetic analyses indicated the presence of major anomalies in the current classification of Australian Palaemonidae. Significantly, three species belonging to three separate genera, Macrobrachium intermedium, Palaemon serenus, and Palaemonetes australis, are closely related, with genetic differences more characteristic with that of congeneric species. The results also demonstrate non-monophyly in Australian palaemonids with respect to both Palaemonetes and Macrobrachium.