New material of the oldest known argyrolagid marsupial Proargyrolagus bolivianus from the late Oligocene of Bolivia is described. The new specimen preserves previously unknown aspects of the anterior dentition that solve the long-standing homology problem concerning the identity (i2) of the procumbent lower incisors in argyrolagids. This new anatomical information is incorporated into a morphology-based phylogenetic analysis of all extant marsupial families and Argyrolagidae, with the aim of testing the monophyly of Paucituberculata and evaluating the relationships among extant marsupial families. Eleven features support the monophyly of Paucituberculata, the following three unique among Marsupialia: small size of the paraconid, procumbent second lower incisor, and supraoccipital without distinct lambdoid crest resulting in globular form of braincase. Paucituberculata is the sister group of an Australian clade of marsupials that includes Dromiciops, but these results are not robust, as shown by sensitivity analyses. The foramen ovale surrounded completely by the alisphenoid supports the association of Dromiciops with diprotodontians.