We characterize pairwise and multiple sequence alignment (MSA) errors by comparing true alignments from simulations of sequence evolution with reconstructed alignments. The vast majority of reconstructed alignments contain many errors. Error rates rapidly increase with sequence divergence, thus, for even intermediate degrees of sequence divergence, more than half of the columns of a reconstructed alignment may be expected to be erroneous. In closely related sequences, most errors consist of the erroneous positioning of a single indel event and their effect is local. As sequences diverge, errors become more complex as a result of the simultaneous mis-reconstruction of many indel events, and the lengths of the affected MSA segments increase dramatically. We found a systematic bias towards underestimation of the number of gaps, which leads to the reconstructed MSA being on average shorter than the true one. Alignment errors are unavoidable even when the evolutionary parameters are known in advance. Correct reconstruction can only be guaranteed when the likelihood of true alignment is uniquely optimal. However, true alignment features are very frequently sub-optimal or co-optimal, with the result that optimal albeit erroneous features are incorporated into the reconstructed MSA. Progressive MSA utilizes a guide-tree in the reconstruction of MSAs. The quality of the guide-tree was found to affect MSA error levels only marginally.