We have sequenced the genome of the emerging human pathogen Babesia microti and compared it with that of other protozoa. B. microti has the smallest nuclear genome among all Apicomplexan parasites sequenced to date with three chromosomes encoding ∼3500 polypeptides, several of which are species specific. Genome-wide phylogenetic analyses indicate that B. microti is significantly distant from all species of Babesidae and Theileridae and defines a new clade in the phylum Apicomplexa. Furthermore, unlike all other Apicomplexa, its mitochondrial genome is circular. Genome-scale reconstruction of functional networks revealed that B. microti has the minimal metabolic requirement for intraerythrocytic protozoan parasitism. B. microti multigene families differ from those of other protozoa in both the copy number and organization. Two lateral transfer events with significant metabolic implications occurred during the evolution of this parasite. The genomic sequencing of B. microti identified several targets suitable for the development of diagnostic assays and novel therapies for human babesiosis.