Two contrasting and very different proposals have been put forward to account for the evolutionary relationships among prokaryotes. The currently widely accepted three domain proposal by Woese et al. (Proc. Natl. Acad. Sci. USA (1990) 87: 4576-4579) calls for the division of prokaryotes into two primary groups or domains, termed archaebacteria (Archaea) and eubacteria (Bacteria), both of which are suggested to have originated independently from a universal ancestor. However, this proposal, which is based primarily on genes involved in the information transfer processes, is inconsistent with the ultrastructural characteristics of prokaryotes as well as with many gene phylogenies and provides no explanation as to how the structural and molecular differences seen between these groups arose and how other prokaryotic taxa are related or evolved from the common ancestor. It also postulates that the last common ancestor of all organisms was a hypothetical entity lacking a cell membrane, which is contrary to the basic requirement of a cell membrane to define and separate all forms of life from the surrounding environment. A second alternate proposal for the evolutionary relationships among prokaryotes has emerged from extensive analyses of numerous conserved inserts and deletions found in various proteins (Gupta, R. S., Microbiol. Mol. Biol. Rev. (1998)62: 1435-1491; FEMS Microbiol. Rev. (2000) 24: in press. This proposal points to a specific relationship between archaebacteria and gram-positive bacteria, both of which are prokaryotes bounded by a single cell membrane (monoderm prokaryotes). Gram-negative bacteria, which are bounded by two different membranes (diderm prokaryotes), are indicated to comprise a structurally and phylogenetically distinct taxa originating from gram-positive bacteria. This proposal postulates that the earliest prokaryote was a gram-positive bacteria from which both archaebacteria and diderm prokaryotes evolved by normal evolutionary mechanisms in response to the strong selection pressure exerted by antibiotics produced by certain groups of gram-positive bacteria. This proposal accounts for both the molecular as well structural differences seen among the main groups of prokaryotes by known evolutionary mechanisms without invoking any hypothetical process or entity and thus is a closer representation of the natural relationships among prokaryotes than the proposal for two distinct domains. Based on this new proposal, it is now possible to logically deduce the branching order of different prokaryotic taxa from the common ancestor, which is as follows: Gram-positive bacteria (Low G + C) (<=> Archaebacteria) => Gram-positive bacteria (High G + C) (<=> Archaebacteria)=> Deinococcus-Thermus => Green nonsulfur bacteria => Cyanobacteria => Spirochetes => Chlamydia- Cytophaga-Green sulfur bacteria => Proteobacteria-1 (epsilon, delta)=> Proteobacteria-2 (alpha) => Proteobacteria-3 (beta) => Proteobacteria-4 (gamma). A surprising but very important aspect of the relationship deduced here is that the main eubacterial phyla are related to each other linearly rather than in a tree-like manner, suggesting that the major evolutionary changes within prokaryotes (bacteria) have occurred in a directional manner.