Bears are iconic mammals with a complex evolutionary history. Natural bear hybrids and studies of few nuclear genes indicate that gene flow among bears may be more common than expected and not limited to the closely related polar and brown bears. Here we present a genome analysis of the bear family with representatives of all living species. Phylogenomic analyses of 869 mega base pairs divided into 18,621 genome fragments yielded a well-resolved coalescent species tree despite signals for extensive gene flow across species. However, genome analyses using three different statistical methods show that gene flow is not limited to closely related species pairs. Strong ancestral gene flow between the Asiatic black bear and the ancestor to polar, brown and American black bear explains numerous uncertainties in reconstructing the bear phylogeny. Gene flow across the bear clade may be mediated by intermediate species such as the geographically wide-spread brown bears leading to massive amounts of phylogenetic conflict. Genome-scale analyses lead to a more complete understanding of complex evolutionary processes. The increasing evidence for extensive inter-specific gene flow, found also in other animal species, necessitates shifting the attention from speciation processes achieving genome-wide reproductive isolation to the selective processes that maintain species divergence in the face of gene flow.