Whole-genome duplication followed by massive gene loss and specialization has long been postulated as a powerful mechanism of evolutionary innovation. Recently, it has become possible to test this notion by searching complete genome sequence for signs of ancient duplication. Here, we show that the yeast Saccharomyces cerevisiae arose from ancient whole-genome duplication, by sequencing and analysing Kluyveromyces waltii, a related yeast species that diverged before the duplication. The two genomes are related by a 1:2 mapping, with each region of K. waltii corresponding to two regions of S. cerevisiae, as expected for whole-genome duplication. This resolves the long-standing controversy on the ancestry of the yeast genome, and makes it possible to study the fate of duplicated genes directly. Strikingly, 95% of cases of accelerated evolution involve only one member of a gene pair, providing strong support for a specific model of evolution, and allowing us to distinguish ancestral and derived functions.