Gene duplication has long been recognized as a major force in genome evolution and has recently been recognized as an important source of individual variation. For many years, the origin of functional gene duplicates was assumed to be whole or partial genome duplication events, but recently retrotransposition has also been shown to contribute new functional protein coding genes and siRNA's. In this study, we utilize pseudogenes to recreate more complete gene family histories, and compare the rates of RNA and DNA-mediated duplication and new functional gene formation in five mammalian genomes. We find that RNA-mediated duplication occurs at a much higher and more variable rate than DNA-mediated duplication, and gives rise to many more duplicated sequences over time. We show that, while the chance of RNA-mediated duplicates becoming functional is much lower than that of their DNA-mediated counterparts, the higher rate of retrotransposition leads to nearly equal contributions of new genes by each mechanism. We also find that functional RNA-mediated duplicates are closer to neighboring genes than non-functional RNA-mediated copies, consistent with co-option of regulatory elements at the site of insertion. Overall, new genes derived from DNA and RNA-mediated duplication mechanisms are under similar levels of purifying selective pressure, but have broadly different functions. RNA-mediated duplication gives rise to a diversity of genes but is dominated by the highly expressed genes of RNA metabolic pathways. DNA-mediated duplication can copy regulatory material along with the protein coding region of the gene and often gives rise to classes of genes whose function are dependent on complex regulatory information. This mechanistic difference may in part explain why we find that mammalian protein families tend to evolve by either one mechanism or the other, but rarely by both. Supplementary Material has been provided (see online Supplementary Material at www.liebertonline.com ).