Symbiosis between organisms is an important driving force in evolution. Among the diverse relationships described, extensive progress has been made in insect–bacteria symbiosis, which improved our understanding of the genome evolution in host-associated bacteria. Particularly, investigations on several obligate mutualists have pushed the limits of what we know about the minimal genomes for sustaining cellular life. To bridge the gap between those obligate symbionts with extremely reduced genomes and their non-host-restricted ancestors, this review focuses on the recent progress in genome characterization of facultative insect symbionts. Notable cases representing various types and stages of host associations, including those from multiple genera in the family Enterobacteriaceae (class Gammaproteobacteria), Wolbachia (Alphaproteobacteria) and Spiroplasma (Mollicutes), are discussed. Although several general patterns of genome reduction associated with the adoption of symbiotic relationships could be identified, extensive variation was found among these facultative symbionts. These findings are incorporated into the established conceptual frameworks to develop a more detailed evolutionary model for the discussion of possible trajectories. In summary, transitions from facultative to obligate symbiosis do not appear to be a universal one-way street; switches between hosts and lifestyles (e.g. commensalism, parasitism or mutualism) occur frequently and could be facilitated by horizontal gene transfer.