Abstract Background Microbial genomes are largely comprised of protein coding sequences, yet some genomes contain many pseudogenes caused by frameshifts or internal stop codons. These pseudogenes are believed to result from gene degradation during evolution but could also be technical artifacts of genome sequencing or assembly. Results Using a combination of observational and experimental data, we show that many putative pseudogenes are attributable to errors that are incorporated into genomes during assembly. Within 126,564 publicly available genomes, we observed that nearly identical genomes often substantially differed in pseudogene counts. Causal inference implicated assembler, sequencing platform, and coverage as likely causative factors. Reassembly of genomes from raw reads confirmed that each variable affects the number of putative pseudogenes in an assembly. Furthermore, simulated sequencing reads corroborated our observations that the quality and quantity of raw data can significantly impact the number of pseudogenes in an assembler dependent fashion. The number of unexpected pseudogenes due to internal stops was highly correlated (R2 = 0.96) with average nucleotide identity to the ground truth genome, implying relative pseudogene counts can be used as a proxy for overall assembly correctness. Applying our method to assemblies in RefSeq resulted in rejection of 3.6% of assemblies due to significantly elevated pseudogene counts. Reassembly from real reads obtained from high coverage genomes showed considerable variability in spurious pseudogenes beyond that observed with simulated reads, reinforcing the finding that high coverage is necessary to mitigate assembly errors. Conclusions Collectively, these results demonstrate that many pseudogenes in microbial genome assemblies are actually genes. Our results suggest that high read coverage is required for correct assembly and indicate an inflated number of pseudogenes due to internal stops is indicative of poor overall assembly quality.