Accurate gene model annotation of reference genomes is critical for making them useful. The modENCODE project has improved the D. melanogaster genome annotation by using deep and diverse high-throughput data. Since transcriptional activity that has been evolutionarily conserved is likely to have an advantageous function, we have performed large-scale interspecific comparisons to increase confidence in predicted annotations. To support comparative genomics, we filled in divergence gaps in the Drosophila phylogeny by generating draft genomes for eight new species. For comparative transcriptome analysis, we generated mRNA expression profiles on 81 samples from multiple tissues and developmental stages of 15 Drosophila species, and we performed cap analysis of gene expression in D. melanogaster and D. pseudoobscura. We also describe conservation of four distinct core promoter structures composed of combinations of elements at three positions. Overall, each type of genomic feature shows a characteristic divergence rate relative to neutral models, highlighting the value of multispecies alignment in annotating a target genome that should prove useful in the annotation of other high priority genomes, especially human and other mammalian genomes that are rich in noncoding sequences. We report that the vast majority of elements in the annotation are evolutionarily conserved, indicating that the annotation will be an important springboard for functional genetic testing by the Drosophila community.