Our work is motivated by Bourque and Pevzner's (2002) simulation study of the effectiveness of the parsimony method in studying genome rearrangement, and leads to a surprising result about the random transposition walk on the group of permutations on $n$ elements. Consider this walk in continuous time starting at the identity and let $D_t$ be the minimum number of transpositions needed to go back to the identity from the location at time $t$. $D_t$ undergoes a phase transition: the distance $D_{cn/2} \sim u(c)n$, where $u$ is an explicit function satisfying $u(c)=c/2$ for $c \le 1$ and $u(c)1$. In other words, the distance to the identity is roughly linear during the subcritical phase, and after critical time $n/2$ it becomes sublinear. In addition, we describe the fluctuations of $D_{cn/2}$ about its mean in each of the threeregimes (subcritical, critical and supercritical). The techniques used involve viewing the cycles in the random permutation as a coagulation-fragmentation process and relating the behavior to the \Erd\H{o}s-Renyi random graph model.