Tunicates or urochordates (appendicularians, salps and sea squirts), cephalochordates (lancelets) and vertebrates (including lamprey and hagfish) constitute the three extant groups of chordate animals. Traditionally, cephalochordates are considered as the closest living relatives of vertebrates, with tunicates representing the earliest chordate lineage. This view is mainly justified by overall morphological similarities and an apparently increased complexity in cephalochordates and vertebrates relative to tunicates. Despite their critical importance for understanding the origins of vertebrates, phylogenetic studies of chordate relationships have provided equivocal results. Taking advantage of the genome sequencing of the appendicularian Oikopleura dioica, we assembled a phylogenomic data set of 146 nuclear genes (33,800 unambiguously aligned amino acids) from 14 deuterostomes and 24 other slowly evolving species as an outgroup. Here we show that phylogenetic analyses of this data set provide compelling evidence that tunicates, and not cephalochordates, represent the closest living relatives of vertebrates. Chordate monophyly remains uncertain because cephalochordates, albeit with a non-significant statistical support, surprisingly grouped with echinoderms, a hypothesis that needs to be tested with additional data. This new phylogenetic scheme prompts a reappraisal of both morphological and palaeontological data and has important implications for the interpretation of developmental and genomic studies in which tunicates and cephalochordates are used as model animals.