Sirenians of the diverse superorder Afrotheria were the first mammals to retransition from land to water and are the sole herbivorous marine mammals, but little is known about the underlying genomic changes. Here, we generated a chromosome-level dugong (Dugong dugon) genome. A comparison of our assembly and a recent West Indian manatee genome with other afrotherian genomes revealed possible molecular solutions to aquatic life by sirenians, including a shift in daily activity patterns (circadian clock) and tolerance to a high-iodine plant diet mediated through changes in the iodide transporter NIS (SLC5A5) and its co-transporters. Functional in vitro assays confirmed that sirenian amino acid substitutions alter the properties of the circadian clock protein PER2 and NIS. Sirenians show evidence of convergent regression of integumentary system (skin and its appendages) genes with cetaceans, the only other fully aquatic mammal group. Our analysis also uncovered gene losses that may be maladaptive in a modern environment, including a candidate gene (KCNK18) for sirenian cold stress syndrome likely lost during their evolutionary shift in daily activity patterns. Finally, genomes from nine Australian locations and the functionally extinct Okinawan population confirm and date a genetic break on the Australian east coast and highlight the need for whole-genome resequencing data from small or isolated dugong populations worldwide for conservation and genetic management.