Large DNA viruses are ubiquitous, infecting diverse organisms ranging from algae to man, and have probably evolved from an ancient common ancestor. In aquatic environments, such algal viruses control blooms and shape the evolution of biodiversity in phytoplankton, but little is known about their biological functions. We show that Ostreococcus tauri, the smallest known marine photosynthetic eukaryote, whose genome is completely characterized, is a host for large DNA viruses, and present an analysis of the life-cycle and 186,234 bp long linear genome of OtV5. OtV5 is a lytic phycodnavirus which unexpectedly does not degrade its host chromosomes before the host cell bursts. Analysis of its complete genome sequence confirmed that it lacks expected site-specific endonucleases, and revealed the presence of 16 genes whose predicted functions are novel to this group of viruses. OtV5 carries at least one predicted gene whose protein closely resembles its host counterpart and several other host-like sequences, suggesting that horizontal gene transfers between host and viral genomes may occur frequently on an evolutionary scale. Fifty seven percent of the 268 predicted proteins present no similarities with any known protein in Genbank, underlining the wealth of undiscovered biological diversity present in oceanic viruses, which are estimated to harbour 200Mt of carbon.