The dramatic evolutionary expansion of the neocortex, together with a proliferation of specialized cortical areas, is believed to underlie the emergence of human cognitive abilities. In a broader phylogenetic context, however, neocortex evolution in mammals, including humans, is remarkably conservative, characterized largely by size variations on a shared six-layered neuronal architecture. By contrast, the telencephalon in non-mammalian vertebrates, including reptiles, amphibians, bony and cartilaginous fishes, and cyclostomes, features a great variety of very different tissue structures. Our understanding of the evolutionary relationships of these telencephalic structures, especially those of basally branching vertebrates and invertebrate chordates, remains fragmentary and is impeded by conceptual obstacles. To make sense of highly divergent anatomies requires a hierarchical view of biological organization, one that permits the recognition of homologies at multiple levels beyond neuroanatomical structure. Here we review the origin and diversification of the telencephalon with a focus on key evolutionary innovations shaping the neocortex at multiple levels of organization.