Vertebrates diverged from other chordates ~500 Myr ago and experienced successful innovations and adaptations, but the genomic basis underlying vertebrate origins are not fully understood. Here we suggest, through comparison with multiple lancelet (amphioxus) genomes, that ancient vertebrates experienced high rates of protein evolution, genome rearrangement and domain shuffling and that these rates greatly slowed down after the divergence of jawed and jawless vertebrates. Compared with lancelets, modern vertebrates retain, at least relatively, less protein diversity, fewer nucleotide polymorphisms, domain combinations and conserved non-coding elements (CNE). Modern vertebrates also lost substantial transposable element (TE) diversity, whereas lancelets preserve high TE diversity that includes even the long-sought RAG transposon. Lancelets also exhibit rapid gene turnover, pervasive transcription, fastest exon shuffling in metazoans and substantial TE methylation not observed in other invertebrates. These new lancelet genome sequences provide new insights into the chordate ancestral state and the vertebrate evolution.