Mygalomorph spiders of the family Theraphosidae, known to the broader public as tarantulas, are among the most recognizable arachnids on earth due to their large size and widespread distribution. Their use of urticating setae is a notable adaptation that has evolved exclusively in certain New World theraphosids. Thus far, the evolutionary history of Theraphosidae remains poorly understood; theraphosid systematics still largely relies on morphological datasets, which suffer from high degrees of homoplasy, and traditional targeted sequencing of preselected genes failed to provide strong support for supra-generic clades (i.e. particularly those broader than subfamilies). In this study, we provide the first robust phylogenetic hypothesis of theraphosid evolution inferred from transcriptome data. A core ortholog approach was used to generate a phylogeny from 2460 orthologous genes across 25 theraphosid genera, representing all of the major theraphosid subfamilies, except Selenogyrinae. For the first time our phylogeny recovers a monophyletic group that comprises the vast majority of New World theraphosid subfamilies including Aviculariinae and Theraphosinae. Concurrently, we provide additional evidence for the integrity of questionable subfamilies, such as Poecilotheriinae and Psalmopoeinae, and support the nonmonophyly of Ischnocolinae. The deeper relationships between almost all subfamilies are confidently inferred for the first time. We also used our phylogeny in tandem with published morphological data to perform ancestral state analyses on urticating setae. This revealed that the evolution of this important defensive trait might be explained by three equally parsimonious scenarios.