Microsporidian strains are usually classified on the basis of their ribosomal DNA (rDNA) sequences. Although rDNA occurs as multiple copies, in most non-microsporidian species copies within a genome occur as tandem arrays and are homogenised by concerted evolution. In contrast, microsporidian rDNA units are dispersed throughout the genome in some species, and on this basis are predicted to undergo reduced concerted evolution. Furthermore many microsporidian species appear to be asexual and should therefore exhibit reduced genetic diversity due to a lack of recombination. Here, DNA sequences are compared between microsporidia with different life cycles in order to determine the effects of concerted evolution and sexual reproduction upon the diversity of rDNA and protein coding genes. Comparisons of cloned rDNA sequences between microsporidia of the genus Nosema with different life cycles provide evidence of intragenomic variability coupled with strong purifying selection. This suggests a birth and death process of evolution. However, some concerted evolution is suggested by clustering of rDNA sequences within species. Variability of protein-coding sequences indicates that considerable intergenomic variation also occurs between microsporidian cells within a single host. Patterns of variation in microsporidian DNA sequences indicate that additional diversity is generated by intragenomic and/or intergenomic recombination between sequence variants. The discovery of intragenomic variability coupled with strong purifying selection in microsporidian rRNA sequences supports the hypothesis that concerted evolution is reduced when copies of a gene are dispersed rather than repeated tandemly. The presence of intragenomic variability also renders the use of rDNA sequences for barcoding microsporidia questionable. Evidence of recombination in the single-copy genes of putatively asexual microsporidia suggests that these species may undergo cryptic sexual reproduction, a possibility with profound implications for the evolution of virulence, host range and drug resistance in these species.