With over 600 valid species, the wrasses (family Labridae) are among the largest and most successful families of the marine teleosts. They feature prominently on coral reefs where they are known not only for their impressive diversity in colouration and form but also for their functional specialisation and ability to occupy a wide variety of trophic guilds. Among the wrasses, the parrotfishes (tribe Scarini) display some of the most dramatic examples of trophic specialisation. Using abrasion-resistant biomineralized teeth, parrotfishes are able to mechanically extract protein-rich micro-photoautotrophs growing in and among reef carbonate material, a dietary niche that is inaccessible to most other teleost fishes. This ability to exploit an otherwise untapped trophic resource is thought to have played a role in the diversification and evolutionary success of the parrotfishes. In order to better understand the key evolutionary innovations leading to the success of these dietary specialists, we sequenced and analysed the genome of a representative species, the spotted parrotfish (Cetoscarus ocellatus). We find significant expansion, selection and duplications within several detoxification gene families and a novel poly-glutamine expansion in the enamel protein ameloblastin, and we consider their evolutionary implications. Our genome provides a useful resource for comparative genomic studies investigating the evolutionary history of this highly specialised teleostean radiation.