Isodiametridae is a large family of Acoela with 22 nominal genera and nearly 100 species. Unfortunately, systematics of Isodiametridae, as it stands, is highly problematic. Genera frequently have been proposed without reference to an explicit phylogenetic hypothesis, such that the current classification system holds little or no predictive power. Many taxa do not fit with the family diagnosis, and it is increasingly difficult to determine in which taxon a new species should be described. Herein, we reconstruct the phylogenetic relationships of Acoela with a focus on Isodiametridae using both previously published and new ribosomal and mitochondrial sequence data. Our dataset comprises sequences from 45 species representing 16 of the 22 isodiametrid genera. Our results recovered a well-supported Isodiametridae, but provided further evidence that the family and several genera within require revision. We have updated the classification system of Isodiametridae to be consistent with its phylogeny, including the transference of Otocelis to Otocelididae, Postaphanostoma and Faerlea to Mecynostomidae and Alluna to Actinoposthiidae. Six other genera are placed in synonymy. We review the morphological taxonomy and provide an identification key of the genera in the revised family.