The gene density of eukaryotic nuclear genomes is generally low relative to prokaryotes, but several eukaryotic lineages (many parasites or endosymbionts) have independently evolved highly compacted, gene-dense genomes. The best studied of these are the microsporidia, highly adapted fungal parasites, and the nucleomorphs, relict nuclei of endosymbiotic algae found in cryptomonads and chlorarachniophytes. These systems are now models for the effects of compaction on the form and dynamics of the nuclear genome. Here we report a large-scale investigation of gene expression from compacted eukaryotic genomes. We have conducted EST surveys of the microsporidian Antonospora locustae and nucleomorphs of the cryptomonad Guillardia theta and the chlorarachniophyte Bigelowiella natans. In all three systems we find a high frequency of mRNA molecules that encode sequence from more than one gene. There is no bias for these genes to be on the same strand, so it is unlikely that these mRNAs represent operons. Instead, compaction appears to have reduced the intergenic regions to such an extent that control elements like promoters and terminators have been forced into or beyond adjacent genes, resulting in long untranslated regions that encode other genes. Normally, transcriptional overlap can interfere with expression of a gene, but these genomes cope with high frequencies of overlap and with termination signals within expressed genes. These findings also point to serious practical difficulties in studying expression in compacted genomes, because many techniques, such as arrays or serial analysis of gene expression will be misleading.