We sequenced the 12S rRNA gene of 2 elusive and morphologically plesiomorphic species of phalanger: the small Sulawesi cuscus (Strigocuscus celebensis—Gray, 1858) and the Sulawesi bear cuscus (Ailurops ursinus— Temminck, 1824). The sequences were integrated with previously existing data on the same gene in other species of phalangerids, as well as newly derived data from Wyulda Alexander, 1918. In contrast to current wisdom, we resolve S. celebensis not as a member of the tribe Trichosurini, but rather as a taxon sister to Ailurops in a reconstituted Ailuropinae in turn successively sister to Phalangerinae. Examination of our data supports an evolutionary origin for the family approximately 34 million years ago (mya), in the northwestern region of the Sahul Shelf, the continental mass underlying Australia and New Guinea. The radiation of the most plesiomorphic genera in the family, Trichosurus and Wyulda, is restricted to that region. S. celebensis, resolved as sister to A. ursinus in a clade ingroup to trichosurines, diverged from remaining ingroup lineages between 21.1 and 23.3 mya, a time when Sulawesi was available for colonization and sea currents would have enhanced the colonization potential from the east of Sulawesi and neighboring islands. We recommend Trichosurinae as a subfamilial level entity on par with Ailuropinae and Phalangerinae, circumscription of Trichosurinae to Trichosurus and Wyulda, and removal of Strigocuscus into Ailuropinae, leaving only Phalanger and Spilocuscus in Phalangerinae.