Magnetotactic bacteria (MTB) are widespread, motile, diverse prokaryotes that biomineralize a unique organelle called the magnetosome. Magnetosomes consist of a nano-sized crystal of a magnetic iron mineral that is enveloped by a lipid bilayer membrane. In cells of almost all MTB, magnetosomes are organized as a well-ordered chain. The magnetosome chain causes the cell to behave like a motile, miniature compass needle where the cell aligns and swims parallel to magnetic field lines. MTB are found in almost all types of aquatic environments, where they can account for an important part of the bacterial biomass. The genes responsible for magnetosome biomineralization are organized as clusters in the genomes of MTB, in some as a magnetosome genomic island. The functions of a number of magnetosome genes and their associated proteins in magnetosome synthesis and construction of the magnetosome chain have now been elucidated. The origin of magnetotaxis appears to be monophyletic; that is, it developed in a common ancestor to all MTB, although horizontal gene transfer of magnetosome genes also appears to play a role in their distribution. The purpose of this review, based on recent progress in this field, is focused on the diversity and the ecology of the MTB and also the evolution and transfer of the molecular determinants involved in magnetosome formation.