?The claim that fossils strongly influence the outcome of phylogenetic analysis for extant taxa has been recently demonstrated in a study of higher amniote relationships (Gauthier, Kluge, and Rowe, 1988, Cladistics 4:105-209). Similar, albeit more limited, effects are also apparent in the case of higher (eutherian) mammal phylogeny. For example, the incorporation of selected fossil taxa shifts the balance of evidence concerning hyracoid relationships in favor of a close affinity between this order and sirenians and proboscideans (Tethytheria). The use of fossils introduces character conflict to a grouping of hyracoids and perissodactyls, indicating that some traits shared by extant hyracoids and extant perissodactyls were acquired independently. Al? though analysis of the combined (Recent and fossil) data set favors the hyracoid-tethythere dade over the hyracoid-perissodactyl dade in the most parsimonious tree, the former grouping is highly vulnerable to collapse when minor homoplasy is introduced. This instability is expected because the fossils function as transitional taxa, with the effect of reducing the number of characters for particular nodes. At the same time, such transitional taxa can more precisely represent the actual transformation events and accordingly provide important information on phylogenetic history. The overall effects of fossils in analysis of higher eutherian mammals is much more subtle than in the amniote case. A primary reason for this discrepancy appears to be the large proportion of characters for extant amniote taxa that show marked transformation relevant to early splitting events. This level of information loss though marked transformation is not as evident in the case of the mammalian orders. Both extant and fossil taxa can introduce major shifts to the original topology of a given tree. Nonetheless, the tendency for fossils to preserve characters lost in living taxa suggests a pivotal role for fossils in many current and pending studies. [Phylogeny; fossils; cladistics; eutherian mammals.] In recent years, the assertion that fossils only play a secondary role in phylogenetic reconstruction (Hennig, 1966; Patterson, 1981; Goodman, 1989) has been countered by cladistic studies that incorporate both fossil and extant taxa. A comprehensive study by Gauthier et al. (1988) was claimed as an example of the critical use of fossil taxa in establishing the interrelationships of higher amniotes. In lieu of the fossils, a close relationship between birds and mammals was suggested regardless of var? ious interpretations of the character evi? dence (Gardiner, 1982; Gauthier et al., 1988). When fossil taxa were added, any one of a number of fossil synapsids ("mam? mallike" reptiles) was sufficient to shift mammals outside a group that comprised turtles, lepidosaurs, crocodiles, and birds as successively closer relatives (Gauthier et al., 1988: their Fig. 3). This exercise effec? tively demonstrates that fossils can resolve phylogenetic events that may be out of reach of evidence derived purely from ex? tant forms. The amniote case, however, d es not erase the possibility that further a dition of extant taxa might critically overturn a phylogeny that incorporates fossils. Moreover, there is no guarantee that fossils will always have such a crucial bear? ing on phylogenetic questions involving extant taxa (Donoghue et al., 1989). Fossil data did not drastically alter the topology of the major seed plant groups indicated by extant taxa alone (Doyle and Donoghue, 1987). Addition of several higher fossil groups had little effect on the relationships identified for extant eutherian mammalian orders (Novacek, 1989). Fossils lacking a large proportion of relevant characters can contribute substantially to the instability and poor resolution of cladograms (Rowe, 1988; Greenwald, 1989; Novacek, 1989). What, then, are the circumstances under which fossils are likely to provide impor? tant insight on relationships among extant