We report the draft genome sequence of the model moss Physcomitrella patens and compare its features with those of flowering plants, from which it is separated by more than 400 million years, and unicellular aquatic algae. This comparison reveals genomic changes concomitant with the evolutionary movement to land, including a general increase in gene family complexity; loss of genes associated with aquatic environments (e.g., flagellar arms); acquisition of genes for tolerating terrestrial stresses (e.g., variation in temperature and water availability); and the development of the auxin and abscisic acid signaling pathways for coordinating multicellular growth and dehydration response. The Physcomitrella genome provides a resource for phylogenetic inferences about gene function and for experimental analysis of plant processes through this plant's unique facility for reverse genetics.