The percomorph fish clade Gobiiformes is a worldwide, tropical and temperate radiation with species occupying nearly all aquatic, and some semi-terrestrial, habitats. Early molecular phylogenetic studies led to the discovery of Gobiiformes, which contains Gobioidei, the gobies and sleepers, and a clade (Apogonoidei) consisting of Apogonidae and Kurtus, the cardinalfishes and nurseryfishes. Gobioidei is consistently resolved as monophyletic in molecular studies, and includes eight families whose members range from waterfall climbing stream gobies to several prominent lineages inhabiting coral reefs. The sister taxon to Gobioidei is also reliably resolved as Apogonoidei. Despite the consistent support for gobiiform monophyly in molecular studies, it is not known if percomorph lineages unsampled in molecular phylogenetic studies are closely related to Gobioidei or Apogonoidei. Here we assemble a large dataset of DNA sequence from ten protein-coding genes, sampling widely across Acanthomorpha and Percomorpha, including Gobioidei, Apogonidae, and Kurtus, along with representatives of all twelve families comprising the former Trachinoidei. The phylogenies inferred from the nuclear gene sequences show that Trachinoidei is polyphyletic, with constituent lineages spread widely among several major percomorph clades. Most notably, the sanddivers (Trichonotus) are resolved as the sister lineage of Gobioidei. This study clarifies the phylogenetic relationships of lineages previously classified in Trachinoidei, identifies Trichonotus as the sister lineage of gobies, provides a molecular phylogeny of the major lineages of Gobioidei, and offers suggested changes to percomorph classification.