Heliconius butterflies are a rapidly radiating neotropical genus widely used in studies of ecology, behaviour, mimicry and speciation. Closely related species typically differ in many aspects of their ecology and behaviour, and in particular their mimetic wing patterns. We have used field selection experiments to demonstrate selection acting directly on wing patterns, and behavioural experiments to show their importance in mate choice, making wing pattern an example of so-called 'magic' traits. We sequenced the genome of Heliconius melpomene and compared it with other taxa to investigate chromosomal evolution in Lepidoptera and gene flow among multiple Heliconius species and races. Among 12,669 predicted genes, biologically important expansions of families of chemosensory and Hox genes are noteworthy. Chromosomal organization has remained broadly conserved since the Cretaceous period, when butterflies split from the Bombyx (silkmoth) lineage. Using genomic resequencing, we show hybrid exchange of genes between three co-mimics, Heliconius melpomene, Heliconius timareta and Heliconius elevatus, especially at two genomic regions that control mimicry pattern. We infer that closely related Heliconius species exchange protective colour-pattern genes promiscuously, implying that hybridization has an important role in adaptive radiation.