Abstract:  The transition in the evolution of cetaceans from terrestrial life to a fully aquatic existence is one of the most enduring evolutionary mysteries. Stem cetaceans are quite diverse and well documented in the fossil record. Five family level clades form the paraphyletic stem cetaceans (‘archaeocetes’): Pakicetidae, Ambulocetidae, Remingtonocetidae, Protocetidae, and Basilosauridae. The most basal group, the pakicetids probably had a semi-aquatic life, living near the freshwater environment. They likely represent the initial step in the transformation of a terrestrial artiodactyl to an aquatic cetacean. The more derived ambulocetids exhibit more characters likely linked to increasing aquatic adaptation, and they probably were more adapted to the marine realm than to a freshwater environment. Remingtonocetids show evolution of balance organs and the sound transmission mechanism in the direction of modern cetaceans. Stable oxygen isotope analyses suggest that remingtonocetids were probably exclusively marine. Protocetids are very diverse, and they are the first cetacean group that acquired a global distribution. Protocetids retain well-developed hind limbs, but their pelvic-vertebra articulation became loose or completely lost. Basilosaurids are the extinct sister group to the crown cetaceans. The phylogenetic relationships between cetaceans and other mammals have long been debated. Molecular, paleontological, and morphological data and analyses all support a close evolutionary link between cetaceans and artiodactyls. However, the prevalent hippopotamus-cetacean hypothesis does not receive solid support from paleontological and morphological data. Detailed review and more extensive phylogenetic analyses on anthracotheriids and entelodontids will aid the clarification of uncertainties related to the hippopotamus-cetacean phylogenetic hypothesis. If the phylogenetic positions of extant cetaceans and artiodactyls were not constrained by molecular data, the traditional mesonychid-cetacean relationship would still have support from the analyses based solely on paleontological and morphological data.