Lateral gene transfer – the transfer of genetic material between species – has been acknowledged as a major mechanism in prokaryotic genome evolution for some time. Recently accumulating data indicate that the process also occurs in the evolution of eukaryotic genomes. However, there are large rate variations between groups of eukaryotes; animals and fungi seem to be largely unaffected, with a few exceptions, while lateral gene transfer frequently occurs in protists with phagotrophic lifestyles, possibly with rates comparable to prokaryotic organisms. Gene transfers often facilitate the acquisition of functions encoded in prokaryotic genomes by eukaryotic organisms, which may enable them to colonize new environments. Transfers between eukaryotes also occur, mainly into larger phagotrophic eukaryotes that ingest eukaryotic cells, but also between plant lineages. These findings have implications for eukaryotic genomic research in general, and studies of the origin and phylogeny of eukaryotes in particular.