Although most metazoan mitochondrial genomes are highly streamlined and encode little noncoding DNA outside of the "AT" region, the accumulation of mitochondrial pseudogenes and other types of noncoding DNA has been observed in a growing number of animal groups. The nematode species Caenorhabditis briggsae harbors two mitochondrial DNA (mtDNA) pseudogenes, named Psinad5-1 and Psinad5-2, presumably derived from the nad5 protein-coding gene. Here, we provide an in-depth analysis of mtDNA pseudogene evolution in C. briggsae natural isolates and related Caenorhabditis species. Mapping the observed presence and absence of the pseudogenes onto phylogenies suggests that Psinad5-1 originated in the ancestor to C. briggsae and its recently discovered outcrossing relative species Caenorhabditis sp. 5 and Caenorhabditis sp. 9. However, Psinad5-1 was not detected in Caenorhabditis sp. 9 natural isolates, suggesting a lineage-specific loss of this pseudogene in this species. Our results corroborated the previous finding that Psinad5-2 originated within C. briggsae. The observed pattern of mitochondrial pseudogene gain and loss in Caenorhabditis was inconsistent with predictions of the tandem duplication-random loss model of mitochondrial genome evolution and suggests that intralineage recombination-like mechanisms might play a major role in Caenorhabditis mtDNA evolution. Natural variation was analyzed at the pseudogenes and flanking mtDNA sequences in 141 geographically diverse C. briggsae natural isolates. Although phylogenetic analysis placed the majority of isolates into the three previously established major intraspecific clades of C. briggsae, two new and unexpected haplotypes fell outside of these conventional groupings. Psinad5-2 copy number variation was observed among C. briggsae isolates collected from the same geographic site. Patterns of nucleotide diversity were analyzed in Psinad5-1 and Psinad5-2, and confidence intervals were found to overlap values from synonymous sites in protein-coding genes, consistent with neutral expectations. Our findings provide new insights into the mode and tempo of mitochondrial genome and pseudogene evolution both within and between Caenorhabditis nematode species.