The marsupial moles are arguably Australia's most enigmatic marsupials. Almost indistinguishable from placental (eutherian) moles, they provide a striking example of convergent evolution. Exploring the genome of the southern marsupial mole, we provide insights into its unusual biology. We show definitively by retrophylogenomic analysis that marsupial moles are most closely related to bandicoots and bilbies (order Peramelemorphia). We find evidence of a marked decline in marsupial mole effective population size, most likely preceding the arrival of humans in regions near its range, and potentially corresponding to periods of climatic change. Our analysis of loss of eye function-an adaptation to subterranean life-reveals a structured order of loss of gene function associated first with the lens, then cone, and finally rod cells. Last, we identify genetic changes suggestive of adaptation to an oxygen-poor environment and of its evolution of partially descended testes.