Here we analyze the molecular evolution of the beta-esterase gene cluster in the Drosophila genus using the recently released genome sequences of 12 Drosophila species. Molecular evolution in this small cluster is noteworthy because it contains contrasting examples of the types and stages of loss of gene function. Specifically, missing orthologs, pseudogenes, and null alleles are all inferred. Phylogenetic analyses also suggest a minimum of 9 gene gain-loss events; however, the exact number and age of these events is confounded by interparalog recombination. A previous enigma, in which allozyme loci were mapped to beta-esterase genes that lacked catalytically essential amino acids, was resolved through the identification of neighbouring genes that contain the canonical catalytic residues and thus presumably encode the mapped allozymes. The originally identified genes are evolving with selective constraint, suggesting that they have a "noncatalytic" function. Curiously, 3 of the 4 paralogous beta-esterase genes in the D. ananassae genome sequence have single inactivating (frame-shift or nonsense) mutations. To determine whether these putatively inactivating mutations were fixed, we sequenced other D. ananassae alleles of these four loci. We did not find any of the 3 inactivating mutations of the sequenced strain in 12 other strains; however, other inactivating mutations were observed in the same 3 genes. This is reminiscent of the high frequency of null alleles observed in one of the beta-esterase genes (Est7/EstP) of D. melanogaster.