Regulatory genes control the expression of other genes and are key components of developmental processes such as segmentation and embryonic construction of the skull in vertebrates. Here we examine the variability and evolution of three vertebrate regulatory genes, addressing issues of their utility for phylogenetics and comparing the rates of genetic change seen in regulatory loci to the rates seen in other genes in the parrotfishes. The parrotfishes are a diverse group of colorful fishes from coral reefs and seagrasses worldwide and have been placed phylogenetically within the family Labridae. We tested phylogenetic hypotheses among the parrotfishes, with a focus on the genera Chlorurus and Scarus, by analyzing eight gene fragments for 42 parrotfishes and eight outgroup species. We sequenced mitochondrial 12s rRNA (967 bp), 16s rRNA (577 bp), and cytochrome b (477 bp). From the nuclear genome, we sequenced part of the protein-coding genes rag2 (715 bp), tmo4c4 (485 bp), and the developmental regulatory genes otx1 (672 bp), bmp4 (488bp), and dlx2 (522 bp). Bayesian, likelihood, and parsimony analyses of the resulting 4903 bp of DNA sequence produced similar topologies that confirm the monophyly of the scarines and provide a phylogeny at the species level for portions of the genera Scarus and Chlorurus. Four major clades of Scarus were recovered, with three distributed in the Indo-Pacific and one containing Caribbean/Atlantic taxa. Molecular rates suggest a Miocene origin of the parrotfishes (22 mya) and a recent divergence of species within Scarus and Chlorurus, within the past 5 million years. Developmentally important genes made a significant contribution to phylogenetic structure, and rates of genetic evolution were high in bmp4, similar to other coding nuclear genes, but low in otx1 and the dlx2 exons. Synonymous and non-synonymous substitution patterns in developmental regulatory genes support the hypothesis of stabilizing selection during the history of these genes, with several phylogenetic regions of accelerated non-synonymous change detected in the phylogeny.