Microsporidia have been known for some time to possess among the smallest genomes of any eukaryote. There is now a completely sequenced microsporidian genome, as well as several other large-scale sequencing efforts, so the nature of these genomes is becoming apparent. This paper reviews some of the characteristics of microsporidian genomes in general, and some of the recent discoveries made through comparative genomic analyses. In general, microsporidian genomes are both reduced and compacted. Reduction takes place through gene loss, which is understandable in obligate intracellular parasites that rely on their host for many metabolites. Compaction is a more complex process, and is as yet not fully understood. It is clear from genomes surveyed thus far that the remaining genes are tightly packed and that there is little non-coding sequence, resulting in some extraordinary arrangements, including overlapping genes. Compaction also seems to affect certain aspects of genome evolution, like the frequency of rearrangements. The force behind this compaction is not known, and is especially interesting in light of the fact that surveys of genomes that are significantly different in size yield similar complements of protein-coding genes. There are some interesting exceptions, including catalase, photolyase and some mitochondrial proteins, but the rarity of these raises an interesting question as to what accounts for the significant differences seen in the genome sizes among microsporidia.