Abstract Approximately 80% of all recent sponge species belong to the class Demospongiae. Yet, despite their diversity and importance, accurate divergence times are still unknown for most demosponge clades. The estimation of demosponge divergence time is key to answering fundamental questions like e.g. the origin of Demospongiae, their diversification and historical biogeography. Molecular sequence data alone is not informative on an absolute time scale, and therefore needs to be “calibrated” with additional data such as fossils. Here, we apply the fossilized birth-death model (FBD), which has the advantage, compared to strict node dating with the oldest fossil occurrences, that it allows for the inclusion of young and old fossils in the analysis of divergence time. We use desma-bearing sponges, a diverse group of demosponges that form rigid skeletons and have a rich and continuous fossil record dating back to the Cambrian (∼500 Ma), aiming to date the demosponge radiation and constrain the timing of key evolutionary events, like the transition from marine to freshwater habitats. To do so, we assembled mitochondrial genomes of six desma-bearing demosponges from size-selected reduced-representation genomic libraries and apply a fossilized birth-death model including 30 fossils and 33 complete demosponge mitochondrial genomes to infer a dated phylogeny of Demospongiae. Our study supports a Neoproterozoic origin of Demospongiae. Novel age estimates for the split of freshwater and marine sponges dating back to the Carboniferous and the previously assumed Recent (∼18 Ma) diversification of freshwater sponges is supported. Moreover, we provide detailed age estimates for a possible diversification of Tetractinellidae (∼315 Ma), the Astrophorina (∼240 Ma), the Spirophorina (∼120 Ma) and the family Corallistidae (∼188 Ma) all of which are considered as key groups for dating the Demospongiae, due to their extraordinary rich and continuous fossil history.