Bacterial symbionts bring a wealth of functions to the associations they participate in, but by doing so, they endanger the genes and genomes underlying these abilities. When bacterial symbionts become obligately associated with their hosts, their genomes are thought to decay towards an organelle-like fate due to decreased homologous recombination and inefficient selection. However, numerous associations exist that counter these expectations, especially in marine environments, possibly due to ongoing horizontal gene flow. Despite extensive theoretical treatment, no empirical study thus far has connected these underlying population genetic processes with long-term evolutionary outcomes. By sampling marine chemosynthetic bacterial-bivalve endosymbioses that range from primarily vertical to strictly horizontal transmission, we tested this canonical theory. We found that transmission mode strongly predicts homologous recombination rates, and that exceedingly low recombination rates are associated with moderate genome degradation in the marine symbionts with nearly strict vertical transmission. Nonetheless, even the most degraded marine endosymbiont genomes are occasionally horizontally transmitted and are much larger than their terrestrial insect symbiont counterparts. Therefore, horizontal transmission and recombination enable efficient natural selection to maintain intermediate symbiont genome sizes and substantial functional genetic variation.