The tree of life is paramount for achieving an integrated understanding of microbial evolution and the relationships between physiology, genealogy and genomics. It provides the framework for interpreting environmental sequence data, whether applied to microbial ecology or to human health. However, there remain many instances where there is ambiguity in our understanding of the phylogeny of major lineages, and/or confounding nomenclature. Here we apply recent genomic sequence data to examine the evolutionary history of members of the classes Mollicutes (phylum Tenericutes) and Erysipelotrichia (phylum Firmicutes). Consistent with previous analyses, we find evidence of a specific relationship between them in molecular phylogenies and signatures of the 16S rRNA, 23S rRNA, ribosomal proteins and aminoacyl-tRNA synthetase proteins. Furthermore, by mapping functions over the phylogenetic tree we find that the erysipelotrichia lineages are involved in various stages of genomic reduction, having lost (often repeatedly) a variety of metabolic functions and the ability to form endospores. Although molecular phylogeny has driven numerous taxonomic revisions, we find it puzzling that the most recent taxonomic revision of the phyla Firmicutes and Tenericutes has further separated them into distinct phyla, rather than reflecting their common roots.