The phylogeny of insects, one of the most spectacular radiations of life on earth, has received considerable attention. However, the evolutionary roots of one intriguing group of insects, the twisted-wing parasites (Strepsiptera), remain unclear despite centuries of study and debate. Strepsiptera exhibit exceptional larval developmental features, consistent with a predicted step from direct (hemimetabolous) larval development to complete metamorphosis that could have set the stage for the spectacular radiation of metamorphic (holometabolous) insects. Here we report the sequencing of a Strepsiptera genome and show that the analysis of sequence-based genomic data (comprising more than 18 million nucleotides from nearly 4,500 genes obtained from a total of 13 insect genomes), along with genomic metacharacters, clarifies the phylogenetic origin of Strepsiptera and sheds light on the evolution of holometabolous insect development. Our results provide overwhelming support for Strepsiptera as the closest living relatives of beetles (Coleoptera). They demonstrate that the larval developmental features of Strepsiptera, reminiscent of those of hemimetabolous insects, are the result of convergence. Our analyses solve the long-standing enigma of the evolutionary roots of Strepsiptera and reveal that the holometabolous mode of insect development is more malleable than previously thought.