As an economic crop, pepper satisfies people’s spicy taste and has medicinal uses worldwide. To gain a better understanding of Capsicum evolution, domestication, and specialization, we present here the genome sequence of the cultivated pepper Zunla-1 (C. annuum L.) and its wild progenitor Chiltepin (C. annuum var. glabriusculum). We estimate that the pepper genome expanded ∼0.3 Mya (with respect to the genome of other Solanaceae) by a rapid amplification of retrotransposons elements, resulting in a genome comprised of ∼81% repetitive sequences. Approximately 79% of 3.48-Gb scaffolds containing 34,476 protein-coding genes were anchored to chromosomes by a high-density genetic map. Comparison of cultivated and wild pepper genomes with 20 resequencing accessions revealed molecular footprints of artificial selection, providing us with a list of candidate domestication genes. We also found that dosage compensation effect of tandem duplication genes probably contributed to the pungent diversification in pepper. The Capsicum reference genome provides crucial information for the study of not only the evolution of the pepper genome but also, the Solanaceae family, and it will facilitate the establishment of more effective pepper breeding programs.