Most ascidians pass through a tadpole (urodele) larval stage, although some species have derived a tailless (anural) larva. New insights into the evolution of anural larvae in the Roscovita clade of molgulid ascidians were obtained from studing embryonic development of the transitional anural species Molgula bleizi and from phylogenetic analysis based on muscle and cytoskeletal actin gene sequences. By observing in vitro fertilized eggs, we found that M. bleizi, previously described as a typical anural developer, actually forms a short immotile tail during embryogenesis. The short tail contains notochord lineage cells, which undergo abbreviated morphogenetic movements but eventually arrest in development. Molgula bleizi tail muscle lineage cells produce the muscle enzyme acetylcholinesterase (AChE) but do not express muscle actin genes. The presence of a short tail, a vestigial notochord, and AChE-positive muscle cells suggest that M. bleizi is a recently derived anural species. An M. bleizi larval muscle actin gene (MbMA1) was isolated, sequenced, and shown to be a pseudogene based on critical deletions in its coding region that would result in a nonfunctional actin protein. The mutations in MbMA1 are distinct from and have evolved independent of the larval muscle actin pseudogenes MoccMA1a and MoccMA1b in Molgula occulta, another anural developer in the Roscovita clade. Pseudogene formation explains the absence of muscle actin mRNA in M. bleizi embryos. The 3' untranslated region of an M. bleizi cytoskeletal actin gene was also isolated and sequenced. Phylogenetic trees reconstructed using muscle and cytoskeletal actin sequences suggest that the anural developer M. bleizi evolved prior to the divergence of the urodele developer Molgula oculata and the anural developer M. occulta in the Roscovita clade. Since M. bleizi lives attached to hard substrata in the tidal zone, whereas M. oculata and M. occulta live buried in subtidal sand flats, our results suggest that the anural larva evolved at least twice in the Roscovita clade of molgulid ascidians as an adaptation to different habitats.