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Background: Folsomia candida is a model in soil biology, belonging to the family of Isotomidae, subclass Collembola. It reproduces parthenogenetically in the presence of Wolbachia, and exhibits remarkable physiological adaptations to stress. To better understand these features and adaptations to life in the soil, we studied its genome in the context of its parthenogenetic lifestyle. Results: We applied Pacific Bioscience sequencing and assembly to generate a reference genome for F. candida of 221.7 Mbp, comprising only 162 scaffolds. The complete genome of its endosymbiont Wolbachia, was also assembled and turned out to be the largest strain identified so far. Substantial gene family expansions and lineage-specific gene clusters were linked to stress response. A large number of genes (809) were acquired by horizontal gene transfer. A substantial fraction of these genes are involved in lignocellulose degradation. Also, the presence of genes involved in antibiotic biosynthesis was confirmed. Intra-genomic rearrangements of collinear gene clusters were observed, of which 11 were organized as palindromes. The Hox gene cluster of F. candida showed major rearrangements compared to arthropod consensus cluster, resulting in a disorganized cluster. Conclusions: The expansion of stress response gene families suggests that stress defense was important to facilitate colonization of soils. The large number of HGT genes related to lignocellulose degradation could be beneficial to unlock carbohydrate sources in soil, especially those contained in decaying plant and fungal organic matter. Intra- as well as inter-scaffold duplications of gene clusters may be a consequence of its parthenogenetic lifestyle. This high quality genome will be instrumental for evolutionary biologists investigating deep phylogenetic lineages among arthropods and will provide the basis for a more mechanistic understanding in soil ecology and ecotoxicology. [ABSTRACT FROM AUTHOR]