The complete genomic sequence of an intracellular bacterial pathogen, Mycoplasma penetrans HF-2 strain, was determined. The HF-2 genome consists of a 1 358 633 bp single circular chromosome containing 1038 predicted coding sequences (CDSs), one set of rRNA genes and 30 tRNA genes. Among the 1038 CDSs, 264 predicted proteins are common to the Mycoplasmataceae sequenced thus far and 463 are M.penetrans specific. The genome contains the two-component system but lacks the essential cellular gene, uridine kinase. The relatively large genome of M.penetrans HF-2 among mycoplasma species may be accounted for by both its rich core proteome and the presence of a number of paralog families corresponding to 25.4% of all CDSs. The largest paralog family is the p35 family, which encodes surface lipoproteins including the major antigen, P35. A total of 44 genes for p35 and p35 homologs were identified and 30 of them form one large cluster in the chromosome. The genetic tree of p35 paralogs suggests the occurrence of dynamic chromosomal rearrangement in paralog formation during evolution. Thus, M.penetrans HF-2 may have acquired diverse repertoires of antigenic variation-related genes to allow its persistent infection in humans.