The demosponge orders Dictyoceratida and Dendroceratida are historically assigned to the keratose (or ‘‘horny’’) sponges, which are mostly devoid of primary skeletal elements, but possess an elaborate skeleton of organic fibres instead. This paucity of complex mineral skeletal elements makes their unambiguous classification and phylogenetic reconstruction based on morphological features difficult. Here we present the most comprehensive molecular phylogeny to date for the Dendroceratida, Dictyoceratida, and also other sponge orders that largely lack a mineral skeleton or skeletal elements at all (i.e. Verongida, Halisarcida, Chondrosida), based on independent mitochondrial and nuclear markers. We used molecular data to validate the coherence of all recognised orders, families and subfamilies that are currently defined using morphological characteristics. We discussed the significance of morphological and chemotaxonomic characters for keratose sponges, and suggested adapted definitions for the classification of dendroceratid, dictyoceratid, and verongid higher taxa. Also, we found that chondrosid sponges are non-monophyletic with respect to Halisarcida. Verongida and Dendroceratida were monophyletic, however most of their classically recognised families were not recovered. This indicated that the current distinction between dendritic and mesh-like fibre skeletons is not significant at this level of classification. Dysideidae were found to be the sister-group to the remaining Dictyoceratida. Irciniidae formed a distinct clade, however Thorectidae and Spongiidae could not be separated with the molecular markers used. Finally, we are establishing the name Verongimorpha for the clade combining verongid, chondrosid and halisarcid taxa and readjust the content of its sister-clade Keratosa.