Background: Nematoda diverged from other animals between 600-1,200 million years ago and has become one of the most diverse animal phyla on earth. Most nematodes are free-living animals, but many are parasites of plants and animals including humans, posing major ecological and economical challenges around the world. Results: We investigated phylum-specific molecular characteristics in Nematoda by exploring over 214,000 polypeptides from 32 nematode species including 27 parasites. Over 50,000 nematode protein families were identified based on primary sequence, including ∼10% with members from at least three different species. Nearly 1,600 of the multi-species families did not share homology to Pfam domains, including a total of 758 restricted to Nematoda. Majority of the 462 families that were conserved among both free-living and parasitic species contained members from multiple nematode clades, yet ∼90% of the 296 parasite-specific families originated only from a single clade. Features of these protein families were revealed through extrapolation of essential functions from observed RNAi phenotypes in C. elegans, bioinformatics-based functional annotations, identification of distant homology based on protein folds, and prediction of expression at accessible nematode surfaces. In addition, we identified a group of nematode-restricted sequence features in energy-generating electron transfer complexes as potential targets for new chemicals with minimal or no toxicity to the host. Conclusion: This study identified and characterized the molecular determinants that help in defining the phylum Nematoda, and therefore improved our understanding of nematode protein evolution and provided novel insights for the development of next generation parasite control strategies.