The diverse array of phenotypes and courtship displays exhibited by the birds-of-paradise have long fascinated scientists and laymen alike. Remarkably, almost nothing is known about the genomics of this iconic radiation. There are 41 species in 16 genera currently recognized within the birds-of-paradise family (Paradisaeidae), most of which are endemic to the island of New Guinea. In this study, we sequenced genomes of representatives from all five major clades within this family to characterize genomic changes that may have played an important role in the evolution of the group's extensive phenotypic diversity. We found genes important for coloration, morphology and feather development to be under positive selection. GO enrichment of positively selected genes in the birds-of-paradise showed an enrichment for collagen, glycogen synthesis and regulation, eye development and other categories. In the core birds-of-paradise, we found GO categories for startle response (response to predators) and olfactory receptor activity to be enriched among the gene families expanding significantly faster compared to the other birds in our study. Furthermore, we found novel families of retrovirus-like retrotransposons active in all three de novo genomes since the early diversification of the birds-of-paradise group, which could have potentially played a role in the evolution of this fascinating group of birds.