Aquatic mammals exhibit a diversity of swimming modes that use paired limbs and/or tail. Muskrat, desmans, and giant otter shrew employ lateral tail undulations. However, some specialized aquatic mammals use dorsoventral (DV) tail movements for swimming. To understand the evolution of DV tail movements in fully aquatic mammals (cetaceans and sirenians), we examine swimming kinematics in the semiaquatic beaver (Castor), and giant river otter (Pteronura), which possess dorsoventrally flattened tails. Results show DV tail undulations are associated with submerged swimming for both taxa. Tail waves increase in amplitude toward the tail tip, moving posteriorly at a velocity faster than the anterior motion of the body to generate thrust. Fleshy lateral extensions along the tail increase the mass of water accelerated posteriorly and affect vorticity shed into the wake. During rectilinear swimming for thrust augmentation DV undulations of the tail are associated with simultaneous paddling strokes of the webbed hind feet. This propulsive pattern may emulate intermediate evolutionary stages toward the derived swimming mode and expanded tail flukes of ancestral cetaceans and sirenians from long robust tails. Intriguingly, the earliest “otter-like” pinnipedimorphs (Puijila) also possessed long tails, even though modern pinnipeds have small tails and swim by oscillation of flippers only. We suggest that transitional, tailed pinnipedimorphs did not use their tails for swimming. Possibly tail reduction and eventual loss in the early stages of this lineage is associated with evolution at higher latitudes. Possession of DV tail undulations, or lack thereof, guided aquatic mammals into different evolutionary trajectories for high thrust and efficient propulsion.