The Alpheidae—possibly the most diverse family of recent decapod crustaceans—offers attractive opportunities to study the evolution of many intriguing phenomena, including key morphological innovations like spectacular snapping claws, highly specialized body forms, facultative and obligate symbioses with many animal groups, and sophisticated behaviors like eusociality. However, studies of these remarkable adaptations remain hampered by insufficient phylogenetic information. We present the first phylogenetic hypothesis of relationships among 36 extant genera of alpheid shrimps, based on a cladistic analysis of 122 morphological characters from 56 species, and we use this hypothesis to explore evolutionary trends in morphology and species diversity. Our results strongly supported a monophyletic Alpheidae that included two hitherto difficult-to-place genera (Yagerocaris and Pterocaris). Of 35 nodes among genera, all were supported by at least one morphological character (24 were supported by two or more) and 17 received greater than 50% jackknife support. Unfortunately, many basal nodes were only weakly supported. Six genera appeared nonmonophyletic, including the dominant genus Alpheus (paraphyletic due to inclusion of one clade with three minor genera). Evolutionary trends in alpheid claw form shed some revealing light on how key innovations evolve. First, several functionally significant features of the cheliped (claw bearing leg) evolved independently multiple times, including: asymmetry, folding, inverted orientation, sexual dimorphism, adhesive plaques that enhance claw cocking, and tooth-cavity systems on opposing claw fingers, a preadaptation for snapping. Many conspicuous features of alpheid claw form therefore appear prone to parallel evolution. Second, although tooth-cavity systems evolved multiple times, a functional snapping claw, which likely facilitated an explosive radiation of over 550 species, evolved only once (in Synalpheus [Alpheus satellite genera]). Third, adhesive plaques (claw cocking aids) also evolved multiple times, and within snapping alpheids are associated with the most diverse clade (Alpheus derivative genera). This pattern of parallel preadaptation—multiple independent evolutionary origins of precursors (preadaptations) to what ultimately became a key innovation (adaptation)—suggests alpheid shrimp claws are predisposed to develop features like tooth-cavity and adhesive plaque systems for functional or developmental reasons. Such functional/developmental predisposition may facilitate the origin of key innovations. Finally, moderate orbital hoods—anterior projections of the carapace partly or completely covering the eyes—occur in many higher Alpheidae and likely evolved before snapping claws. They are unique among decapod crustaceans, and their elaboration in snapping alpheids suggests they may protect the eyes from the stress of explosive snaps. Thus one key innovation (orbital hoods) may have facilitated evolution of a second (snapping claws).