Niche dependent differential gene loss and overlapping genes have been proposed as means of achieving genome reduction by retaining indispensable genes and compressing maximum amount of information in available sequence space. Herein, we analyzed the differential gene loss and overlapping genes in bacterial genomes with different lifestyles. Our results clearly suggest that gene loss and overlapping genes could be a result of evolutionary pressure to minimize genome size. Comparative analysis of the genomes shows that the genomes display marked similarities in patterns of protein length and frequency. It is clear from our analysis that habitat is a major factor contributing to genome reduction. These comparisons increase our knowledge of the forces that drive the extreme specialization of the bacteria and its association to the host.