The ultrastructure of spermatogenesis and spermatozoa was studied in Timema poppensis Vickery & Sandoval, 1999, a putative basal taxon of Phasmatodea. The apical portion of testis follicles consists of spermatogonial cells with polymorphic nuclei. Primary spermatocytes display very short primary cilia originating from the peripheral centrosomes. Early spermatids develop a conspicuous “nebenkern” consisting of fused mitochondria. They have a single peripheral centriole with microtubular triplets, which expresses a 3.6-μm-long cilium featuring a 9 + 2 axonemal pattern. In a later stage, the centriole and the ciliary shaft displace toward the inner part of the cytoplasm by an infolding of the plasma membrane. Mature spermatids exhibit a derived centriole with microtubule doublets devoid of dynein arms, which is equipped with a dense arc-like outer structure. Ciliary degeneration was not observed during spermiogenesis. Spermatozoa are short flagellate cells about 55–60 μm in length. They are characterized by a three-layered acrosomal complex. The distinctive bell-shaped morphology of the acrosome vesicle is likely an autapomorphic trait of Timema. The flagellum has a 9 + 9 + 2 axoneme, two accessory bodies, two flattened cisterns, and two elongated mitochondrial derivatives. Results support the hypothesis that Phasmatodea, comprising Timema + Euphasmatodea, form a monophyletic group. The presence of 17 protofilaments in the wall of accessory microtubules and the flattened configuration of the flagellum are potential apomorphic groundplan features of the order. Within Phasmatodea, a key evolutionary divergence was from the conventional insect spermiogenesis and sperm structure of Timema, to the unusual spermiogenetic process and peculiar sperm structure of Euphasmatodea. As a result, Timema retains more sperm character states found in the polyneopteran ground pattern, while Euphasmatodea have evolved outstanding sperm autapomorphies, like the loss of mitochondria and flattened cisterns, and the presence of strongly expanded accessory bodies.