Coalescent theory provides a powerful framework for estimating the evolutionary, demographic, and genetic parameters of a population from a small sample of individuals. Current coalescent models have largely focused on population genetic factors (e.g., mutation, population growth, and migration) rather than on the effects of experimental design and error. This study develops a new coalescent/mutation model that accounts for unobserved polymorphisms due to missing data, sequence errors, and multiple reads for diploid individuals. The importance of accommodating these effects of experimental design and error is illustrated with evolutionary simulations and a real data set from a population of the California sea hare. In particular, a failure to account for sequence errors can lead to overestimated mutation rates, inflated coalescent times, and inappropriate conclusions about the population. This current model can now serve as a starting point for the development of newer models with additional experimental and population genetic factors. It is currently implemented as a maximum-likelihood method, but this model may also serve as the basis for the development of Bayesian approaches that incorporate experimental design and error.T HE genealogy for a small random sample of sequences is influenced by a large number of evolutionary, demographic, and genetic factors for its population. By making a few basic assumptions, coalescent theory provides the framework to estimate the probabilities of these genealogies and their associated population parameters (Hudson 1990;Donnelly and Tavaré 1995;Hein et al. 2004). Current coalescent models continue to emphasize population genetic factors such as mutation, varying population size, migration, and divergence time. These models are implemented with both maximum-likelihood (ML) and sampling-based (e.g., Markov chain Monte Carlo, MCMC) approaches. Although exact, the former is generally practical or even possible only for the simpler models (i.e., those that account for a single factor) and smaller data sets. In turn, although approximate, the latter can usually accommodate more complex models and larger data sets. The sampling-based methods often rely on a Bayesian setting, where parameters are integrated over their ranges and expected values are obtained (rather than ML estimates).In contrast to this emphasis on population genetic factors, the effects of experimental design and error on a coalescent study have been largely ignored (Felsenstein 2004). Most current coalescent models assume that haplotype data are available for diploids and that sequence variation is sampled in an unbiased manner. However, haplotypes are not always available, particularly for nuclear markers, and single-nucleotide polymorphisms (SNPs), for example, are often ascertained in ways that can bias their subsequent analysis. In light of these facts, new coalescent models have been introduced to account for these effects of experimental design Nielsen 2000).This study develops a new coalescent/muta...