Microbial diversity is typically characterized by clustering ribosomal RNA (SSU-rRNA) sequences into operational taxonomic units (OTUs). Targeted sequencing of environmental SSU-rRNA markers via PCR may fail to detect OTUs due to biases in priming and amplification. Analysis of shotgun sequenced environmental DNA, known as metagenomics, avoids amplification bias but generates fragmentary, non-overlapping sequence reads that cannot be clustered by existing OTU-finding methods. To circumvent these limitations, we developed PhylOTU, a computational workflow that identifies OTUs from metagenomic SSU-rRNA sequence data through the use of phylogenetic principles and probabilistic sequence profiles. Using simulated metagenomic data, we quantified the accuracy with which PhylOTU clusters reads into OTUs. Comparisons of PCR and shotgun sequenced SSU-rRNA markers derived from the global open ocean revealed that while PCR libraries identify more OTUs per sequenced residue, metagenomic libraries recover a greater taxonomic diversity of OTUs. In addition, we discover novel species, genera and families in the metagenomic libraries, including OTUs from phyla missed by analysis of PCR sequences. Taken together, these results suggest that PhylOTU enables characterization of part of the biosphere currently hidden from PCR-based surveys of diversity?