Pseudogenes have been defined as nonfunctional sequences of genomic DNA originally derived from functional genes. It is therefore assumed that all pseudogene mutations are selectively neutral and have equal probability to become fixed in the population. Rather, pseudogenes that have been suitably investigated often exhibit functional roles, such as gene expression, gene regulation, generation of genetic (antibody, antigenic, and other) diversity. Pseudogenes are involved in gene conversion or recombination with functional genes. Pseudogenes exhibit evolutionary conservation of gene sequence, reduced nucleotide variability, excess synonymous over nonsynonymous nucleotide polymorphism, and other features that are expected in genes or DNA sequences that have functional roles. We first review the Drosophila literature and then extend the discussion to the various functional features identified in the pseudogenes of other organisms. A pseudogene that has arisen by duplication or retroposition may, at first, not be subject to natural selection if the source gene remains functional. Mutant alleles that incorporate new functions may, nevertheless, be favored by natural selection and will have enhanced probability of becoming fixed in the population. We agree with the proposal that pseudogenes be considered as potogenes, i.e., DNA sequences with a potentiality for becoming new genes.