Abstract Background Parasite evolution has been conceptualized as a process of genetic loss and simplification. Contrary to this model, there is evidence of expansion and conservation of gene families related to essential functions of parasitism in some parasite genomes, reminiscent of widespread mosaic evolution—where subregions of a genome have different rates of evolutionary change. We found evidence of mosaic genome evolution in the cnidarian Myxobolus honghuensis, a myxozoan parasite of fish, with extremely simple morphology. Results We compared M. honghuensis with other myxozoans and free-living cnidarians, and determined that it has a relatively larger myxozoan genome (206 Mb), which is less reduced and less compact due to gene retention, large introns, transposon insertion, but not polyploidy. Relative to other metazoans, the M. honghuensis genome is depleted of neural genes and has only the simplest animal immune components. Conversely, it has relatively more genes involved in stress resistance, tissue invasion, energy metabolism, and cellular processes compared to other myxozoans and free-living cnidarians. We postulate that the expansion of these gene families is the result of evolutionary adaptations to endoparasitism. M. honghuensis retains genes found in free-living Cnidaria, including a reduced nervous system, myogenic components, ANTP class Homeobox genes, and components of the Wnt and Hedgehog pathways. Conclusions Our analyses suggest that the M. honghuensis genome evolved as a mosaic of conservative, divergent, depleted, and enhanced genes and pathways. These findings illustrate that myxozoans are not as genetically simple as previously regarded, and the evolution of some myxozoans is driven by both genomic streamlining and expansion. Supplementary Information The online version contains supplementary material available at 10.1186/s12915-022-01249-8. Keywords: Evolutionary genomics, Parasite evolution, Genome streamlining, Cnidaria, Myxozoa, Myxobolus honghuensis Background Parasite evolution is a focal issue in evolutionary biology and ecology [[35]1, [36]2]. Understanding the evolutionary processes of the transition of ancestral free-living organisms to parasitism is important for human health and agriculture and offers a new testing ground for evolutionary and ecological theory [[37]3, [38]4]. Relative to free-living species, parasite genomes are typically smaller and more tightly packed with protein-coding genes [[39]5, [40]6]. Parasite evolution is usually considered to be accompanied by loss of genetic complexity, as exploitation of host metabolic pathways releases selective constraints on parts of the parasite genome, resulting in loss of now-redundant functions (and associated genes) [[41]7]. Accordingly, an appealing reductive theory of evolution has been developed to describe this loss of function and subsequent streamlining that governs parasite genome evolution [[42]8, [43]9]. However, there is evidence for conservation and even expansion of gene families associated with infection and survival in some parasite genomes [[44]6, [45]10]. The opposing characters of genomic streamlining and expansion are components of a pervasive process known as mosaic evolution, which is the tendency for a genome to evolve as a set of discrete units, each with its own evolutionary mode, rather than being dominated by a uniform trend [[46]11, [47]12]. Mosaic evolution is widely used to frame observed genomic changes in free-living taxa including mice, humans, and birds [[48]12–[49]15]. There is much less evidence of selective genetic expansion in parasites [[50]6, [51]10, [52]16–[53]18]; thus, mosaic evolution has rarely been emphasized in describing parasite evolutionary patterns. We propose that a more complete picture of parasite genome evolution should incorporate the opposing features of streamlining and novel complexity. Cnidarians are early-diverging metazoans and ideally suited for investigating the genomic changes that underlie parasitism, as the group includes both free-living (e.g., Medusozoa, Anthozoa) and parasitic taxa (Myxozoa and Polypodiozoa) [[54]19]. Myxozoa are microscopic, oligocellular endoparasites with simple body organization, but multiple morphologies in their complex life cycles [[55]20, [56]21]. The few sequenced myxozoan genomes are more compact and smaller than those of free-living cnidarians [[57]22], with some species having reduced metabolic capacity [[58]23], or having lost core animal features such as cytosine methylation [[59]24] or their mitochondrial genome [[60]25]. These findings support the view that evolutionary loss and simplification have played a major role in shaping the evolution of myxozoans [[61]22, [62]25, [63]26]. Here we characterize the genome of Myxobolus honghuensis, a parasite of economically important gibel carp [[64]27]. We compare its genome with other myxozoans and free-living Cnidaria to reveal unique and conserved genomic features that characterize this cryptically complex parasite group. Results Genome assembly and annotation We sequenced the M. honghuensis genome with a PacBio RSII, yielding ~136× coverage and a 16-kilobase (kb) average read length (Additional file [65]1: Table S1). The final long-read data contained 2,030,357 sequences with a mean length of 10.4 kb (Additional file [66]1: Table S2). The genome size was estimated by k-mer analysis using Jellyfish software (Additional file [67]2: Fig. S1) to be 206 megabases (Mb). The FALCON-assembled genome contained 1118 contigs (161 Mb, N50 1.3 Mb; Table [68]1). M. honghuensis has a relatively larger myxozoan genome (Additional file [69]1: Table S3). The assembly showed high integrity and quality, with >98.5% of Illumina genome survey reads mapped to the PacBio assembly (Additional file [70]1: Table S4), and successful reconstruction of the nuclear rRNAs. Core Eukaryotic Genes Mapping Approach (CEGMA) [[71]28] identified only 42.7% of CEGs; a low percentage also seen in another myxozoan [[72]25] and possibly due to fast-evolutionary rates rendering even common eukaryotic genes difficult to recognize. Table 1. Comparison of myxozoan genome assembly quality Species name Myxobolus honghuensis Thelohanellus kitauei Myxobolus squamalis Henneguya salminicola Kudoa iwatai Enteromyxum leei Sphaeromyxa zaharoni Assembly size (kb) 161,092,274 150,348,159 43,671,844 61,443,780 31,197,353 68,163,509 173,585,031 Number of scaffolds 1118 5757 37,921 18,330 1639 69,053 70,914 Number of contigs 1118 15,632 37,919 18,330 1646 69,178 70,935 Contig N50 1,273,483 13,033 1286 7570 39,532 998 4474 Scaffold N50 1,273,483 149,756 1286 7570 40,195 998 4474 CEGs (complete) 42.7% 46.8% 37.5% 53.6% 73.0% 25.8% 39.1% %GC 22.8 37.5 27.3 29.0 23.6 33.5 28.0 References Present study Yang et al., 2014 [[73]23] Yahalomi et al.,