A statistical method was developed for reconstructing the nucleotide or amino acid sequences of extinct ancestors, given the phylogeny and sequences of the extant species. A model of nucleotide or amino acid substitution was employed to analyze data of the present-day sequences, and maximum likelihood estimates of parameters such as branch lengths were used to compare the posterior probabilities of assignments of character states (nucleotides or amino acids) to interior nodes of the tree; the assignment having the highest probability was the best reconstruction at the site. The lysozyme c sequences of six mammals were analyzed by using the likelihood and parsimony methods. The new likelihood-based method was found to be superior to the parsimony method. The probability that the amino acids for all interior nodes at a site reconstructed by the new method are correct was calculated to be 0.91, 0.86, and 0.73 for all, variable, and parsimony-informative sites, respectively, whereas the corresponding probabilities for the parsimony method were 0.84, 0.76, and 0.51, respectively. The probability that an amino acid in an ancestral sequence is correctly reconstructed by the likelihood analysis ranged from 91.3 to 98.7% for the four ancestral sequences.