A comprehensive phylogenetic analysis of the Terebellidae and related families was undertaken. Type material of all genera of Terebellinae was examined, together with representatives of nearly all genera of remaining Terebellidae subfamilies, and representatives of the families that have been traditionally regarded as being closely related, comprising the Terebelliformia. In total, 85 species were coded using 118 subjects (‘characters’) and 286 subject–predicate relations (‘states’). The results indicate: (1) the paraphyly of Terebellidae by the placements of Trichobranchidae, Ampharetidae, Alvinellidae and Pectinariidae within that clade; (2) the occurrences of Thelepodinae as separate clades, consistent with groups ‘A’ and ‘B’ recognised by Nogueira et al. (2010a); and (3) the monophyly of Polycirrinae and Terebellinae. The previously considered subfamilies of Terebellidae are raised to familial level and a new family is described. Revised definitions are provided for: Terebelliformia, Polycirridae, stat. nov., Telothelepodidae, fam. nov., Terebellidae emend., and Thelepodidae, stat. nov., along with a discussion of character evolution in the Terebellidae.