Background: Whipple's disease is a rare multisystem chronic infection, involving the intestinal tract as well as various other organs. The causative agent, Tropheryma whipplei, is a Gram-positive bacterium about which little is known. Our aim was to investigate the biology of this organism by generating and analysing the complete DNA sequence of its genome. Methods: We isolated and propagated T whipplei strain TW08/27 from the cerebrospinal fluid of a patient diagnosed with Whipple's disease. We generated the complete sequence of the genome by the whole genome shotgun method, and analysed it with a combination of automatic and manual bioinformatic techniques. Findings: Sequencing revealed a condensed 925 938 bp genome with a lack of key biosynthetic pathways and a reduced capacity for energy metabolism. A family of large surface proteins was identified, some associated with large amounts of non-coding repetitive DNA, and an unexpected degree of sequence variation. Interpretation: The genome reduction and lack of metabolic capabilities point to a host-restricted lifestyle for the organism. The sequence variation indicates both known and novel mechanisms for the elaboration and variation of surface structures, and suggests that immune evasion and host interaction play an important part in the lifestyle of this persistent bacterial pathogen.