The amplified fragment length polymorphism (AFLP) technique is being increasingly used in phylogenetic studies, especially in groups of rapidly radiating taxa. One of the key issues in the phylogenetic suitability of this technique is whether the DNA fragments generated via the AFLP method are homologous within and among the taxa being studied. We used a bioinformatics approach to assess homology based on both chromosomal location and sequence similarity of AFLP fragments. The AFLP technique was electronically simulated on genomes from eight organisms that represented a range of genome sizes. The results demonstrated that within a genome, the number of fragments is positively associated with genome size, and the degree of homology decreases with increasing numbers of fragments generated. The average homology of fragments was 89% for small genomes (< 400 Mb) but decreased to 59% for large genomes (> 2 Gb). Fragment homology for large genomes can be increased by excluding smaller fragments, although there is no clear upper limit for the size of fragments to exclude. A second approach is to increase the number of selective nucleotides in the final selective amplification step. For strains of the same organism, homology based on chromosome location and sequence similarity of fragments was 100%. Fragment homology for more distantly related taxa, however, decreased with greater time since divergence. We conclude that AFLP data are best suited for examining phylogeographic patterns within species and among very recently diverged species.