Abstract Microchromosomes, once considered unimportant shreds of the chicken genome, are gene rich elements with a high GC content and few transposable elements. Their origin has been debated for decades. We used cytological and whole genome sequence comparisons, and chromosome conformation capture, to trace their origin and fate in genomes of reptiles, birds and mammals. We find that microchromosomes as well as macrochromosomes are highly conserved across birds, and share synteny with single small chromosomes of the chordate amphioxus, attesting to their origin as elements of an ancient animal genome. Turtles and squamates (snakes and lizards) share different subsets of ancestral microchromosomes, having independently lost microchromosomes by fusion with other microchromosomes or macrochromosomes. Patterns of fusions were quite different in different lineages. Cytological observations show that microchromosomes in all lineages are spatially separated into a central compartment at interphase and during mitosis and meiosis. This reflects higher interaction between microchromosomes than with macrochromosomes, as observed by chromosome conformation capture, and suggests some functional coherence. In highly rearranged genomes fused microchromosomes retain most ancestral characteristics, but these may erode over evolutionary time; surprisingly de novo microchromosomes have rapidly adopted high interaction. Some chromosomes of early branching monotreme mammals align to several bird microchromosomes, suggesting multiple microchromosome fusions in a mammalian ancestor. Subsequently multiple rearrangements fueled the extraordinary karyotypic diversity of therian mammals. Thus microchromosomes, far from being aberrant genetic elements, represent fundamental building blocks of amniote chromosomes, and it is mammals, rather than reptiles, that are atypical. Significance Statement Genomes of birds and reptiles, but not mammals, consist of a few large chromosomes and many tiny microchromosomes. Once considered unimportant shreds of the genome, microchromosomes are gene rich and highly conserved among bird and reptiles, and share homology with one or more of the tiny chromosomes of an invertebrate that diverged from the vertebrate lineage 684 million years ago. Microchromosomes interact strongly and crowd together at the centre of cells, suggesting functional coherence. Many microchromosomes have been lost independently in turtles, snakes and lizards as they have fused with each other, or with larger chromosomes. In mammals they have completely disappeared, yet some chromosomes of the basal platypus line up with several microchromosomes, suggesting that they are the building blocks of the atypically variable chromosomes of mammals.