Like many other crops, the cultivated peanut (Arachis hypogaea L.) is of hybrid origin and has a polyploid genome that contains essentially complete sets of chromosomes from two ancestral species. Here we report the genome sequence of peanut and show that after its polyploid origin, the genome has evolved through mobile-element activity, deletions and by the flow of genetic information between corresponding ancestral chromosomes (that is, homeologous recombination). Uniformity of patterns of homeologous recombination at the ends of chromosomes favors a single origin for cultivated peanut and its wild counterpart A. monticola. However, through much of the genome, homeologous recombination has created diversity. Using new polyploid hybrids made from the ancestral species, we show how this can generate phenotypic changes such as spontaneous changes in the color of the flowers. We suggest that diversity generated by these genetic mechanisms helped to favor the domestication of the polyploid A. hypogaea over other diploid Arachis species cultivated by humans.