This chapter highlights endosymbiont hypothesis. All contemporary genomes (including those of plastids and mitochondria) ultimately derive from a single genome—the genome of a single, presumably cellular, entity which was the ancestor of all surviving forms of live. The construction and interpretation of phylogenetic trees based on small subunit (SSU, or 16S-like) and large subunit (LSU, or 23S-like) rRNA sequences have proven especially informative in instances where morphological diversity tends to confound traditional methods of phylogenetic analysis. In addition to ribosomal RNA (rRNA) sequence, there are a number of traits that characterize the archaebacteria as a distinct group of organisms, separate from all other prokaryotes. These include (1) cell walls that, when present, lack peptidoglycan and muramic acid; (2) the presence of lipids containing phytanyl side groups in ether linkage; and (3) the presence of RNA polymerases that are distinct from those of eubacteria in subunit composition, response to RNA synthesis inhibitors or stimulators, immunological reactivity, and gene sequence. Two major divisions of archaebacteria include (1) sulfur-dependent, extreme thermophiles; and (2) methane-producers (methanogens) and their relatives, including the extreme halophiles. © 1992, Academic Press Inc.