The extent to which lateral genetic transfer has shaped microbial genomes has major implications for the emergence of community structures. We have performed a rigorous phylogenetic analysis of >220,000 proteins from genomes of 144 prokaryotes to determine the contribution of gene sharing to current prokaryotic diversity, and to identify "highways" of sharing between lineages. The inferred relationships suggest a pattern of inheritance that is largely vertical, but with notable exceptions among closely related taxa, and among distantly related organisms that live in similar environments.