Electroreception, the capacity to detect external underwater electric fields with specialised receptors, is a phylogenetically widespread sensory modality in fishes and amphibians. In passive electroreception, a capacity possessed byc. 16% of fish species, an animal uses low‐frequency‐tuned ampullary electroreceptors to detect microvolt‐range bioelectric fields from prey, without the need to generate its own electric field. In active electroreception (electrolocation), which occurs only in the teleost lineages Mormyroidea and Gymnotiformes, an animal senses its surroundings by generating a weak (< 1 V) electric‐organ discharge (EOD) and detecting distortions in the EOD‐associated field using high‐frequency‐tuned tuberous electroreceptors. Tuberous electroreceptors also detect the EODs of neighbouring fishes, facilitating electrocommunication. Several other groups of elasmobranchs and teleosts generate weak (< 10 V) or strong (> 50 V) EODs that facilitate communication or predation, but not electrolocation. Approximately 1.5% of fish species possess electric organs. This review has two aims. First, to synthesise our knowledge of the functional biology and phylogenetic distribution of electroreception and electrogenesis in fishes, with a focus on freshwater taxa and with emphasis on the proximate (morphological, physiological and genetic) bases of EOD and electroreceptor diversity. Second, to describe the diversity, biogeography, ecology and electric signal diversity of the mormyroids and gymnotiforms and to explore the ultimate (evolutionary) bases of signal and receptor diversity in their convergent electrogenic–electrosensory systems. Four sets of potential drivers or moderators of signal diversity are discussed. First, selective forces of an abiotic (environmental) nature for optimal electrolocation and communication performance of the EOD. Second, selective forces of a biotic nature targeting the communication function of the EOD, including sexual selection, reproductive interference from syntopic heterospecifics and selection from eavesdropping predators. Third, non‐adaptive drift and, finally, phylogenetic inertia, which may arise from stabilising selection for optimal signal‐receptor matching.