The topic of the transition of the genome of a free-living bacterial organism to that of an organelle is addressed by considering three cases. Two of these are relatively clear-cut as involving respectively organisms (cyanobacteria) and organelles (plastids). Cyanobacteria are usually free-living but some are involved in symbioses with a range of eukaryotes in which the cyanobacterial partner contributes photosynthesis, nitrogen fixation, or both of these. In several of these symbioses the cyanobacterium is vertically transmitted, and in a few instances, sufficient unsuccessful attempts have been made to culture the cyanobiont independently for the association to be considered obligate for the cyanobacterium. Plastids clearly had a cyanobacterial ancestor but cannot grow independently of the host eukaryote. Plastid genomes have at most 15% of the number of genes encoded by the cyanobacterium with the smallest number of genes; more genes than are retained in the plastid genome have been transferred to the eukaryote nuclear genome, while the rest of the cyanobacterial genes have been lost. Even the most cyanobacteria-like plastids, for example the "cyanelles" of glaucocystophyte algae, are functionally and genetically very similar to other plastids and give little help in indicating intermediates in the evolution of plastids. The third case considered is the vertically transmitted intracellular bacterial symbionts of insects where the symbiosis is usually obligate for both partners. The number of genes encoded by the genomes of these obligate symbionts is intermediate between that of organelles and that of free-living bacteria, and the genomes of the insect symbionts also show rapid rates of sequence evolution and AT (adenine, thymine) bias. Genetically and functionally, these insect symbionts show considerable similarity to organelles.