Background Bacterial symbioses are widespread among insects. The early establishment of such symbiotic associations has probably been one of the key factors for the evolutionary success of insects, since it may have allowed access to novel ecological niches and to new imbalanced food resources, such as plant sap or blood. Several genomes of bacterial endosymbionts of different insect species have been recently sequenced, and their biology has been extensively studied. Recently, the complete genome sequence of Candidatus Carsonella ruddii, considered the primary endosymbiont of the psyllid Pachpsylla venusta, has been published. This genome consists of a circular chromosome of 159,662 bp and has been proposed as the smallest bacterial endosymbiont genome known to date. Results The detailed analysis of the gene content of C. ruddii shows that the extensive degradation of the genome is not compatible with its consideration as a mutualistic endosymbiont and, even more, as a living organism. The ability to perform most essential functions for a cell to be considered alive is heavily impaired by the lack of genes involved in DNA replication, transcription and translation. Furthermore, the shortening of genes causes, in some cases, the loss of essential domains and functional residues needed to fulfill such vital functions. In addition, at least half of the pathways towards the biosynthesis of essential amino acids, its proposed symbiotic function, are completely or partially lost. Conclusion We propose that this strain of C. ruddii can be viewed as a further step towards the degeneration of the former primary endosymbiont and its transformation in a subcellular new entity between living cells and organelles. Although the transition of genes from C. ruddii to the host nucleus has been proposed, the amount of genes that should have been transferred to the germinal line of the insect would be so big that it would be more plausible to consider the implication of the mitochondrial machinery encoded in the insect nucleus. Furthermore, since most genes for the biosynthesis of essential amino acids have also been lost, it is likely that the host depends on another yet unidentified symbiont to complement its deficient diet.