Prokaryotic genomes are small and compact. Either this feature is caused by neutral evolution or by natural selection favoring small genomes-genome streamlining. Three separate prior lines of evidence argue against streamlining for most prokaryotes. We find that the same three lines of evidence argue for streamlining in the genomes of thermophile bacteria. Specifically, with increasing habitat temperature and decreasing genome size, the proportion of genomic DNA in intergenic regions decreases. Furthermore, with increasing habitat temperature, generation time decreases. Genome-wide selective constraints do not decrease as in the reduced genomes of host-associated species. Reduced habitat variability is not a likely explanation for the smaller genomes of thermophiles. Genome size may be an indirect target of selection due to its association with cell volume. We use metabolic modeling to demonstrate that known changes in cell structure and physiology at high temperature can provide a selective advantage to reduce cell volume at high temperatures.