Lateral gene transfer (LGT) is now known to be a major force in the evolution of prokaryotic genomes. To date, most analyses have focused on either (a) verifying phylogenies of individual genes thought to have been transferred, or (b) estimating the fraction of individual genomes likely to have been introduced by transfer. Neither approach does justice to the ability of LGT to effect massive and complex transformations in basic biology. In some cases, such transformation will be manifested as the patchy distribution of a seemingly fundamental property (such as aerobiosis or nitrogen fixation) among the members of a group classically defined by the sharing of other properties (metabolic, morphological, or molecular, such as small subunit ribosomal RNA sequence). In other cases, the lineage of recipients so transformed may be seen to comprise a new group of high taxonomic rank ("class" or even "phylum"). Here we review evidence for an important role of LGT in the evolution of photosynthesis, aerobic respiration, nitrogen fixation, sulfate reduction, methylotrophy, isoprenoid biosynthesis, quorum sensing, flotation (gas vesicles), thermophily, and halophily. Sometimes transfer of complex gene clusters may have been involved, whereas other times separate exchanges of many genes must be invoked.