OM43 is a clade of uncultured beta-proteobacteria that is commonly found in environmental nucleic acid sequences from productive coastal ocean ecosystems, and some freshwater environments, but is rarely detected in ocean gyres. Ecological studies associate OM43 with phytoplankton blooms, and evolutionary relationships indicate that they might be methylotrophs. Here we report on the genome sequence and metabolic properties of the first axenic isolate of the OM43 clade, strain HTCC2181, which was obtained using new procedures for culturing cells in natural seawater. We found that this strain is an obligate methylotroph that cannot oxidize methane but can use the oxidized C1 compounds methanol and formaldehyde as sources of carbon and energy. Its complete genome is 1304 428 bp in length, the smallest yet reported for a free-living cell. The HTCC2181 genome includes genes for xanthorhodopsin and retinal biosynthesis, an auxiliary system for producing transmembrane electrochemical potentials from light. The discovery that HTCC2181 is an extremely simple specialist in C1 metabolism suggests an unanticipated, important role for oxidized C1 compounds as substrates for bacterioplankton productivity in coastal ecosystems.