The order Mysida Boas, 1883 is a group of small, shrimp‐like peracarid crustaceans with surprisingly high morphological and ecological diversity. In this study, a new genus and species of deep‐sea mysids, Muscamysis carolinensis gen. et sp. n., is described based on a solitary specimen recently collected from the Caroline Ridge, Northwest Pacific. To determine the phylogenetic position of the new genus within Mysida, we reconstruct a comprehensive multi‐gene phylogeny of the order, incorporating 45 species from 10 sub‐families and two families. Our analysis reveals strong support for a close relationship between the new genus and Mysidellinae Czerniavsky, 1882, with both forming a clade nested within Heteromysinae Norman, 1892. Notably, our findings do not support the current delineation or monophyly of most mysid sub‐families, emphasizing the necessity for further taxonomic revisions. Specifically, Palaumysinae Wittmann, 2013 is now synonymized with Erythropinae Hansen, 1910, while Heteromysinae is synonymized with Mysidellinae. Bayesian divergence time estimation uncovers, for the first time, multiple independent coastal subterranean colonizations of mysids during the Mesozoic. Ancestral state reconstruction analyses suggest that characters, such as the cleft telson and reduced male pleopods, are the results of parallel evolution, indicating that certain diagnostic characters may not be apomorphic, thereby necessitating more substantial revisions to the current higher‐level classification of the order.