16Symbiodiniaceae are predominantly symbiotic dinoflagellates critical to corals and other reef 17 organisms. Symbiodinium is a basal symbiodiniacean lineage and includes symbiotic and free-living 18 taxa. However, the molecular mechanisms underpinning these distinct lifestyles remain little 19 known. Here, we present high-quality de novo genome assemblies for the symbiotic Symbiodinium 20 tridacnidorum CCMP2592 (genome size 1.3 Gbp) and the free-living Symbiodinium natans 21 CCMP2548 (genome size 0.74 Gbp). These genomes display extensive sequence divergence, 22sharing only ~1.5% conserved regions (≥90% identity). We predicted 45,474 and 35,270 genes for 23 S. tridacnidorum and S. natans, respectively; of the 58,541 homologous gene families, 28.5% are 24 common to both genomes. We recovered a greater extent of gene duplication and higher abundance 25 of repeats, transposable elements and pseudogenes in the genome of S. tridacnidorum than in that of 26 S. natans. These findings demonstrate that genome structural rearrangements are pertinent to 27 distinct lifestyles in Symbiodinium, and may contribute to the vast genetic diversity within the 28 genus, and more broadly in Symbiodiniaceae. Moreover, the results from our whole-genome 29 comparisons against a free-living outgroup support the notion that the symbiotic lifestyle is a 30 derived trait in, and that the free-living lifestyle is ancestral to, Symbiodinium. 31 with the potential to shift between a free-living motile stage (i.e. mastigote form) and a spherical 56 symbiotic stage (i.e. coccoid form). The genomes of facultative and recent intracellular symbionts 57 and parasites are usually very unstable, with extensive structural rearrangements, intensified activity 58 of transposable elements (TEs) and exacerbated gene duplication that leads to the accumulation of 59 pseudogenes 19,20 . Symbiotic Symbiodiniaceae are thus expected to display similar genomic features. 60In this study, we present draft de novo genome assemblies of S. tridacnidorum CCMP2592 and S. 61 natans CCMP2548. Using a comparative genomic approach, we found extensive genome-sequence 62 divergence and few shared families of predicted genes between the two species. A greater extent of 63 gene duplication, and the higher abundance of TEs and pseudogenes in S. tridacnidorum relative to 64 S. natans suggest that duplication and transposition underpin genome divergence between these 65 species. 66 5