The Nymphaeales (water lilies) clade has diverged as the second branch in the tree of angiosperms and is composed of the three families Cabombaceae, Nymphaeaceae and Hydatellaceae. Extant species diversity is constituted by 82 species, about half of which belong to the nearly globally distributed genus Nymphaea. DNA sequence datasets of multiple non‐coding and rapidly evolving regions from all three genomic compartments (ca. 8 kb of sequence per taxon) for a dense sampling of Nymphaeales, Austrobaileyales and Amborella were examined. In an attempt to review the literature on water lilies of the past decades a matrix comprising 62 morphological characters was generated. The crown group of extant Nymphaeales is supported by a series of synapomorphies, several of which have evolved in line with the acquisition of herbaceous habits and adaptations to an aquatic lifestyle such as the loss of cambium and sclerenchyma. Further innovations evolved subsequently within the diversification of the water lily crown group such as hydropotes, or an aril as floating device for the seeds in core Nymphaeaceae that have evolved fruits ripening under water. Both Hydatellaceae and Cabombaceae exhibit many derived features that in part may be explained as adaptations to anemophily. The Nymphaeaceae are supported as monophyletic by most character partitions, including morphology, as are Nuphar and Barclaya as successive sisters to the core Nymphaeacae (Nymphaea, Ondinea, Euryale, Victoria). Parsimony analysis of the morphological dataset alone yielded a well resolved and statistically supported tree. Ondinea appears as a close relative of the Australian subg. Anecphya clade within Nymphaea by all genomic compartments and morphology. Earlier hypotheses of Nymphaea being paraphyletic to the Euryale‐Victoria clade are inferred in nuclear trees, albeit with low support. Different morphological characters equivocally support a position of the Euryale‐Victoria clade as sister to the subg. Hydrocallis‐Lotus clade within Nymphaea or as sister to all species of Nymphaea. The diversification of the water lily clade is further characterized by a trend towards increased complexity in floral architecture.