Onychophorans, or velvet worms, are cryptic but extremely charismatic terrestrial invertebrates that have often been the subject of interesting biogeographic debate. Despite great interest, a well resolved and complete phylogeny of the group and a reliable chronogram have been elusive due to their broad geographic distribution, paucity of samples, and challenging molecular composition. Here we present a molecular phylogenetic analysis of Onychophora that includes previously unsampled and undersampled lineages and we analyse the expanded dataset using a series of nested taxon sets designed to increase the amount of information available for particular subclades. These include a dataset with outgroups, one restricted to the ingroup taxa, and three others for Peripatopsidae, Peripatidae and Neopatida (= the Neotropical Peripatidae). To explore competing biogeographic scenarios we generate a new time tree for Onychophora using the few available reliable fossils as calibration points. Comparing our results to those of Cyphophthalmi, we reconsider the hypothesis that velvet worms reached Southeast Asia via Eurogondwana, and conclude that a more likely scenario is that they reached Southeast Asia by rafting on the Sibumasu terrane. Our phylogenetic results support the reciprocal monophyly of both families as well as an early division between East and West Gondwana, also in both families, each beginning to diversify between the Permian and the Jurassic. Peripatopsidae clearly supports paraphyly of South Africa with respect to southern South America (Chile) and a sister group relationship of the Southeast Asian/New Guinean Paraperipatus to the Australian/New Zealand taxa. The latter includes a clade that divides between Western Australia and Eastern Australia and two sister clades of trans-Tasman species (one oviparous and one viviparous). This pattern clearly shows that oviparity is secondarily derived in velvet worms. Peripatidae finds a sister group relationship between the Southeast Asian Eoperipatus and the West Gondwanan clade, which divides into the African Mesoperipatus and Neopatida. The latter shows a well supported split between the Pacific Oroperipatus (although it is unclear whether they form one or two clades) and a sister clade that includes the members of the genera Peripatus, Epiperipatus, Macroperipatus and representatives of the monotypic genera Cerradopatus, Plicatoperipatus and Principapillatus. However, Peripatus, Epiperipatus and Macroperipatus are not monophyletic, and all the species from the monotypic genera are related to geographically close species. The same goes for the type species of Macroperipatus (from Trinidad, and sister group to other Trinidad and Tobago species of Epiperipatus) and Epiperipatus (from French Guiana, and related to other Guyana shield species of Epiperipatus and Peripatus). Geographic structure within Neopatida is largely obscured by an unresolved backbone, but many well supported instances of generic non-monophyly challenge the current taxonomic framework, which has often relied on anatomical characters that are untested phylogenetically.