Background Cyanobacteria belong to an ancient group of photosynthetic prokaryotes with pronounced variations in their cellular differentiation strategies, physiological capacities and choice of habitat. Sequencing efforts have shown that genomes within this phylum are equally diverse in terms of size and protein-coding capacity. To increase our understanding of genomic changes in the lineage, the genomes of 58 contemporary cyanobacteria were analysed for shared and unique orthologs. Results A total of 404 protein families, present in all cyanobacterial genomes, were identified. Two of these are unique to the phylum, corresponding to an AbrB family transcriptional regulator and a gene that escapes functional annotation although its genomic neighbourhood is conserved among the organisms examined. The evolution of cyanobacterial genome sizes involves a mix of gains and losses in the clade encompassing complex cyanobacteria, while a single event of reduction is evident in a clade dominated by unicellular cyanobacteria. Genome sizes and gene family copy numbers evolve at a higher rate in the former clade, and multi-copy genes were predominant in large genomes. Orthologs unique to cyanobacteria exhibiting specific characteristics, such as filament formation, heterocyst differentiation, diazotrophy and symbiotic competence, were also identified. An ancestral character reconstruction suggests that the most recent common ancestor of cyanobacteria had a genome size of approx. 4.5 Mbp and 1678 to 3291 protein-coding genes, 4%-6% of which are unique to cyanobacteria today. Conclusions The different rates of genome-size evolution and multi-copy gene abundance suggest two routes of genome development in the history of cyanobacteria. The expansion strategy is driven by gene-family enlargment and generates a broad adaptive potential; while the genome streamlining strategy imposes adaptations to highly specific niches, also reflected in their different functional capacities. A few genomes display extreme proliferation of non-coding nucleotides which is likely to be the result of initial expansion of genomes/gene copy number to gain adaptive potential, followed by a shift to a life-style in a highly specific niche (e.g. symbiosis). This transition results in redundancy of genes and gene families, leading to an increase in junk DNA and eventually to gene loss. A few orthologs can be correlated with specific phenotypes in cyanobacteria, such as filament formation and symbiotic competence; these constitute exciting exploratory targets.