Some microbial eukaryotes, such as the extremophilic red alga Galdieria sulphuraria, can live in hot, toxic metal-rich, acidic environments. To elucidate the underlying molecular mechanisms of adaptation, we sequenced the 13.7 Mb genome of G. sulphuraria. This alga shows an enormous metabolic flexibility, growing either photoautotrophically or heterotrophically on more than 50 carbon sources. Environmental adaptation seems to have been facilitated by horizontal gene transfer from various bacteria and archaea, often followed by gene family expansion. At least 5% of protein-coding genes of G. sulphuraria were probably acquired horizontally. These proteins are involved in ecologically important processes ranging from heavy metal detoxification to glycerol uptake and metabolism. Thus, our findings show that a pan-domain gene pool has facilitated environmental adaptation in this unicellular eukaryote.