Background: Arthropoda, the most numerous and diverse metazoan phylum, has species in many habitats where they encounter various microorganisms and, as a result, mechanisms for pathogen recognition and elimination have evolved. The Toll pathway, involved in the innate immune system, was first described as part of the developmental pathway for dorsal-ventral differentiation in Drosophila. Its later discovery in vertebrates suggested that this system was extremely conserved. However, there is variation in presence/absence, copy number and sequence divergence in various genes along the pathway. As most studies have only focused on Diptera, for a comprehensive and accurate homology-based approach it is important to understand gene function in a number of different species and, in a group as diverse as insects, the use of species belonging to different taxonomic groups is essential. Results: We evaluated the diversity of Toll pathway gene families in 39 Arthropod genomes, encompassing 13 different Insect Orders. Through computational methods, we shed some light into the evolution and functional annotation of protein families involved in the Toll pathway innate immune response. Our data indicates that: 1) intracellular proteins of the Toll pathway show mostly species-specific expansions; 2) the different Toll subfamilies seem to have distinct evolutionary backgrounds; 3) patterns of gene expansion observed in the Toll phylogenetic tree indicate that homology based methods of functional inference might not be accurate for some subfamilies; 4) Spatzle subfamilies are highly divergent and also pose a problem for homology based inference; 5) Spatzle subfamilies should not be analyzed together in the same phylogenetic framework; 6) network analyses seem to be a good first step in inferring functional groups in these cases. We specifically show that understanding Drosophila’s Toll functions might not indicate the same function in other species. Conclusions: Our results show the importance of using species representing the different orders to better understand insect gene content, origin and evolution. More specifically, in intracellular Toll pathway gene families the presence of orthologues has important implications for homology based functional inference. Also, the different evolutionary backgrounds of Toll gene subfamilies should be taken into consideration when functional studies are performed, especially for TOLL9, TOLL, TOLL2_7, and the new TOLL10 clade. The presence of Diptera specific clades or the ones lacking Diptera species show the importance of overcoming the Diptera bias when performing functional characterization of Toll pathways.