The limited knowledge we have about red algal genomes comes from the highly specialized extremophiles, Cyanidiophyceae. Here, we describe the first genome sequence from a mesophilic, unicellular red alga, Porphyridium purpureum. The 8,355 predicted genes in P. purpureum, hundreds of which are likely to be implicated in a history of horizontal gene transfer, reside in a genome of 19.7 Mbp with 235 spliceosomal introns. Analysis of light-harvesting complex proteins reveals a nuclear-encoded phycobiliprotein in the alga. We uncover a complex set of carbohydrate-active enzymes, identify the genes required for the methylerythritol phosphate pathway of isoprenoid biosynthesis, and find evidence of sexual reproduction. Analysis of the compact, function-rich genome of P. purpureum suggests that ancestral lineages of red algae acted as mediators of horizontal gene transfer between prokaryotes and photosynthetic eukaryotes, thereby significantly enriching genomes across the tree of photosynthetic life.