Bacterial endosymbionts of eukaryotes show progressive genome erosion, but detailed investigations of the evolutionary processes involved in the transition to an intracellular lifestyle are generally hampered by the lack of extant free-living lineages. Here, we characterize the genome of the recently isolated, free-living Endomicrobium proavitum, the second member of the Elusimicrobia phylum brought into pure culture, and compare it to the closely related “Candidatus Endomicrobium trichonymphae” strain Rs-D17, a previously described but uncultured endosymbiont of termite gut flagellates. A reconstruction of the metabolic pathways of Endomicrobium proavitum matched the fermentation products formed in pure culture and underscored its restriction to glucose as the substrate. However, several pathways present in the free-living strain, e.g., for the uptake and activation of glucose and its subsequent fermentation, ammonium assimilation, and outer membrane biogenesis, were absent or disrupted in the endosymbiont, probably lost during the massive genome rearrangements that occurred during symbiogenesis. While the majority of the genes in strain Rs-D17 have orthologs in Endomicrobium proavitum, the endosymbiont also possesses a number of functions that are absent from the free-living strain and may represent adaptations to the intracellular lifestyle. Phylogenetic analysis revealed that the genes encoding glucose 6-phosphate and amino acid transporters, acetaldehyde/alcohol dehydrogenase, and the pathways of glucuronic acid catabolism and thiamine pyrophosphate biosynthesis were either acquired by horizontal gene transfer or may represent ancestral traits that were lost in the free-living strain. The polyphyletic origin of Endomicrobia in different flagellate hosts makes them excellent models for future studies of convergent and parallel evolution during symbiogenesis.IMPORTANCE The isolation of a free-living relative of intracellular symbionts provides the rare opportunity to identify the evolutionary processes that occur in the course of symbiogenesis. Our study documents that the genome of “Candidatus Endomicrobium trichonymphae,” which represents a clade of endosymbionts that have coevolved with termite gut flagellates for more than 40 million years, is not simply a subset of the genes present in Endomicrobium proavitum, a member of the ancestral, free-living lineage. Rather, comparative genomics revealed that the endosymbionts possess several relevant functions that were either prerequisites for colonization of the intracellular habitat or might have served to compensate for genes losses that occurred during genome erosion. Some gene sets found only in the endosymbiont were apparently acquired by horizontal transfer from other gut bacteria, which suggests that the intracellular bacteria of flagellates are not entirely cut off from gene flow. Copyright © 2017 American Society for Microbiology.