The loss of functions required for independent life when living within a host gives rise to reduced genomes in obligate bacterial symbionts. Although this phenomenon can be explained by existing evolutionary models, its initiation is not well understood. Here, we describe the microbiome associated with eggs of the beetle Lagria villosa, containing multiple bacterial symbionts related to Burkholderia gladioli including a reduced-genome symbiont thought to produce the defensive compound lagriamide. We find that the putative lagriamide producer is the only symbiont undergoing genome reduction, and that it has already lost most primary metabolism and DNA repair pathways. The horizontal acquisition of the lagriamide biosynthetic gene cluster likely preceded genome reduction, and unexpectedly we found that the symbiont accepted additional genes horizontally during genome reduction, even though it lacks the capacity for homologous recombination. These horizontal gene transfers suggest that absolute genetic isolation is not a requirement for genome reduction.

Horizontal gene transfer to a defensive symbiont with a reduced genome amongst a multipartite beetle microbiome