Evolution and the relationships between macromolecules, as seen in their nucleotide and protein sequences, are the foundation of sequence analysis. Understanding how the evolutionary process works is key to understanding how we compare sequences and how we identify sequences with an evolutionary relationship. The inheritance of genes and their encoded proteins (homologs) from common ancestors, with only limited changes due to evolution, means that such homologous genes/proteins have similar structure and function. Determining whether gene/protein sequences are homologous is therefore a critical issue in bioinformatics. In turn, determining whether sequences are homologs depends on confidence that the degree of observed sequence similarity would not be observed by chance. This chapter will discuss the concepts of evolution, homology, and how to determine whether genes/proteins are homologous.