Despite the potential model role of the green algal genus Codium for studies of marine speciation and evolution, there have been difficulties with species delimitation and a molecular phylogenetic framework was lacking. In the present study, 74 evolutionarily significant units (ESUs) are delimited using 227 rbcL exon 1 sequences obtained from specimens collected throughout the genus' range. Several morpho-species were shown to be poorly defined, with some clearly in need of lumping and others containing pseudo-cryptic diversity. A phylogenetic hypothesis of 72 Codium ESUs is inferred from rbcL exon 1 and rps3-rpl16 sequence data using a conventional nucleotide substitution model (GTR+Gamma+I), a codon position model and a covariotide (covarion) model, and the fit of a multitude of substitution models and alignment partitioning strategies to the sequence data is reported. Molecular clock tree rooting was carried out because outgroup rooting was probably affected by phylogenetic bias. Several aspects of the evolution of morphological features of Codium are discussed and the inferred phylogenetic hypothesis is used as a framework to study the biogeography of the genus, both at a global scale and within the Indian Ocean.