The impact of including insertion/deletion events as phylogenetic characters was explored within North American Psoraleeae (Leguminosae). This comprehensive analysis of the impact of gap character incorporation spanned four different indel coding schemes, gaps coded as missing characters, simple binary characters, multi-state characters, and as a 5th state, across two optimality criteria: maximum parsimony and Bayesian Inference. Two nuclear (ITS and Waxy) and six chloroplast (trnS/G, trnL/F, trnK, matK, trnD/T, and rpoB-trnC) DNA regions were sequenced from 43 species of North American Psoraleeae as the foundation of the study. Our results suggest that gaps can provide a substantial percentage of informative characters and can increase phylogenetic resolution and nodal branch support. Phylogenetic signal within indels was higher in chloroplast regions relative to nuclear regions, demonstrating their inclusion as especially important in chloroplast-based phylogenetic studies. Phylogenetic analysis of generic relationships within Psoraleeae is largely congruent with that proposed by Grimes (1990) with a few exceptions. New World species are supported as a monophyletic group. Our analyses suggest that Otholobium may need to be split into two genera and that Psoralidium is polyphyletic and will require movement of Psoralidium tenuiflorum to Pediomelum.