Lactic acid bacteria (LAB) are found to occupy a variety of ecological niches including fermented foods as well as mucosal surfaces of humans and other vertebrates. This review is based on the genomic content of LAB that is responsible for the functional and ecological diversity of these bacteria. These genomes reveal an ongoing process of reductive evolution as the LAB have specialized to different nutritionally rich environments. Species-to-species variation in the number of pseudogenes as well as genes directing nutrient uptake and metabolism reflects the adaptation of LAB to food matrices and the gastrointestinal tract. Although a general trend of genome reduction was observed, certain niche-specific genes appear to be recently acquired and appear on plasmids or adjacent to prophages. Recent work has improved our understanding of the genomic content responsible for various phenotypes that continue to be discovered, as well as those that have been exploited by man for thousands of years.