A common belief is that evolution generally proceeds towards greater complexity at both the organismal and the genomic level, numerous examples of reductive evolution of parasites and symbionts notwithstanding. However, recent evolutionary reconstructions challenge this notion. Two notable examples are the reconstruction of the complex archaeal ancestor and the intron-rich ancestor of eukaryotes. In both cases, evolution in most of the lineages was apparently dominated by extensive loss of genes and introns, respectively. These and many other cases of reductive evolution are consistent with a general model composed of two distinct evolutionary phases: the short, explosive, innovation phase that leads to an abrupt increase in genome complexity, followed by a much longer reductive phase, which encompasses either a neutral ratchet of genetic material loss or adaptive genome streamlining. Quantitatively, the evolution of genomes appears to be dominated by reduction and simplification, punctuated by episodes of complexification.