Catfish represent 12% of teleost or 6.3% of all vertebrate species, and are of enormous economic value. Here we report a high-quality reference genome sequence of channel catfish (Ictalurus punctatus), the major aquaculture species in the US. The reference genome sequence was validated by genetic mapping of 54,000 SNPs, and annotated with 26,661 predicted protein-coding genes. Through comparative analysis of genomes and transcriptomes of scaled and scaleless fish and scale regeneration experiments, we address the genomic basis for the most striking physical characteristic of catfish, the evolutionary loss of scales and provide evidence that lack of secretory calcium-binding phosphoproteins accounts for the evolutionary loss of scales in catfish. The channel catfish reference genome sequence, along with two additional genome sequences and transcriptomes of scaled catfishes, provide crucial resources for evolutionary and biological studies. This work also demonstrates the power of comparative subtraction of candidate genes for traits of structural significance.