This study reports the first telomere-to-telomere (T2T) gap-free genomes of *Capsicum annuum* and its nonpungent wild relative *C. rhomboideum*, which are crucial for understanding the evolution of fruit pungency in chili peppers. The genomes were assembled using a combination of PacBio HiFi, Oxford Nanopore Technology (ONT) ultralong, Illumina paired-end, and Hi-C sequencing data. The *C. annuum* genome (CaT2T) is 3.1 Gb with a contig N50 of 262.6 Mb, while the *C. rhomboideum* genome (CrT2T) is 1.7 Gb with a contig N50 of 146.0 Mb. These assemblies are nearly complete, with all telomeres and centromeres identified. The centromeres of *Capsicum* species lack high-copy tandem repeats but are extensively invaded by CRM retrotransposons. Phylogenomic analyses reveal that capsaicinoid biosynthesis emerged in *Capsicum* around 13.4 million years ago (Mya), with key genes like *capsaicin synthase* (CS) undergoing tandem duplications. The study also identifies conserved placenta-specific accessible chromatin regions, suggesting tissue-specific regulation of capsaicinoid biosynthesis. These T2T genomes provide valuable resources for advancing chili pepper genetic improvement and understanding Capsicum genome evolution.This study reports the first telomere-to-telomere (T2T) gap-free genomes of *Capsicum annuum* and its nonpungent wild relative *C. rhomboideum*, which are crucial for understanding the evolution of fruit pungency in chili peppers. The genomes were assembled using a combination of PacBio HiFi, Oxford Nanopore Technology (ONT) ultralong, Illumina paired-end, and Hi-C sequencing data. The *C. annuum* genome (CaT2T) is 3.1 Gb with a contig N50 of 262.6 Mb, while the *C. rhomboideum* genome (CrT2T) is 1.7 Gb with a contig N50 of 146.0 Mb. These assemblies are nearly complete, with all telomeres and centromeres identified. The centromeres of *Capsicum* species lack high-copy tandem repeats but are extensively invaded by CRM retrotransposons. Phylogenomic analyses reveal that capsaicinoid biosynthesis emerged in *Capsicum* around 13.4 million years ago (Mya), with key genes like *capsaicin synthase* (CS) undergoing tandem duplications. The study also identifies conserved placenta-specific accessible chromatin regions, suggesting tissue-specific regulation of capsaicinoid biosynthesis. These T2T genomes provide valuable resources for advancing chili pepper genetic improvement and understanding Capsicum genome evolution.