Here we present the genome sequence and annotation of the wild olive tree (Olea europaea var. sylvestris), called oleaster, which is considered an ancestor of cultivated olive trees. More than 50,000 protein-coding genes were predicted, a majority of which could be anchored to 23 pseudochromosomes obtained through a newly constructed genetic map. The oleaster genome contains signatures of two Oleaceae lineage-specific paleopolyploidy events, dated at ∼28 and ∼59 Mya. These events contributed to the expansion and neofunctionalization of genes and gene families that play important roles in oil biosynthesis. The functional divergence of oil biosynthesis pathway genes, such as FAD2, SACPD, EAR, and ACPTE, following duplication, has been responsible for the differential accumulation of oleic and linoleic acids produced in olive compared with sesame, a closely related oil crop. Duplicated oleaster FAD2 genes are regulated by an siRNA derived from a transposable element-rich region, leading to suppressed levels of FAD2 gene expression. Additionally, neofunctionalization of members of the SACPD gene family has led to increased expression of SACPD2, 3, 5, and 7, consequently resulting in an increased desaturation of steric acid. Taken together, decreased FAD2 expression and increased SACPD expression likely explain the accumulation of exceptionally high levels of oleic acid in olive. The oleaster genome thus provides important insights into the evolution of oil biosynthesis and will be a valuable resource for oil crop genomics.