The sequenced genomes of the two closely related bacteria Mycoplasma genitalium and Mycoplasma pneumoniae were compared with emphasis on genome organization and coding capacity. All the 470 proposed open reading frames (ORFs) of the smaller M.genitalium genome (580 kb) were contained in the larger genome (816 kb) of M.pneumoniae. There were some discrepancies in annotation, but inspection of the DNA sequences showed that the corresponding DNA was always present in M. pneumoniae. The two genomes could be subdivided into six segments. The order of orthologous genes was well conserved within individual segments but the order of these segments in both bacteria was different. We explain the different organization of the segments by translocation via homologous recombination. The translocations did not disturb the continuous bidirectional course of transcription in both genomes, starting at the proposed origin of replication. The additional 236 kb in M.pneumoniae,compared with theM.genitalium genome, were coding for 209 proposed ORFs not identified in M.genitalium. Of these ORFs, 110 were specific to M.pneumoniae exhibiting no significant similarity to M.genitalium ORFs, while 76 ORFs were amplifications of ORFs existing mainly as single copies in M. genitalium. In addition, 23 ORFs containing a copy of either one of the three repetitive DNA sequences RepMP2/3, RepMP4 and RepMP5 were annotated in M.pneumoniae but not in M.genitalium,although similar DNA sequences were present. TheM.pneumoniae-specific genes included a restriction-modification system, two transport systems for carbohydrates, the complete set of three genes coding for the arginine dihydrolase pathway and 14 copies of the repetitive DNA sequence RepMP1 which were part of several different translated genes with unknown function.