Thiotrophic symbioses between sulphur-oxidizing bacteria and various unicellular and metazoan eukaryotes are widespread in reducing marine environments. The giant colonial ciliate Zoothamnium niveum, however, is the only host of thioautotrophic symbionts that has been cultivated along with its symbiont, the vertically transmitted ectosymbiont Candidatus Thiobius zoothamnicola (short Thiobius). Because theoretical predictions posit a smaller genome in vertically transmitted endosymbionts compared to free-living relatives, we investigated whether this is true also for an ectosymbiont. We used metagenomics to recover the high-quality draft genome of this bacterial symbiont. For comparison we have also sequenced a closely related free-living cultured but not formally described strain Milos ODIII6 (short ODIII6). We then performed comparative genomics to assess the functional capabilities at gene, metabolic pathway and trait level. 16S rRNA gene trees and average amino acid identity confirmed the close phylogenetic relationship of both bacteria. Indeed, Thiobius has about a third smaller genome than its free-living relative ODIII6, with reduced metabolic capabilities and fewer functional traits. The functional capabilities of Thiobius were a subset of those of the more versatile ODIII6, which possessed additional genes for oxygen, sulphur and hydrogen utilization and for the acquisition of phosphorus illustrating features that may be adaptive for the unstable environmental conditions at hydrothermal vents. In contrast, Thiobius possesses genes potentially enabling it to utilize lactate and acetate heterotrophically, compounds that may be provided as byproducts by the host. The present study illustrates the effect of strict host-dependence of a bacterial ectosymbiont on genome evolution and host adaptation.