Overlapping genes are defined, in this paper, as a pair of adjacent genes whose coding regions are partly overlapping. We systematically analyzed all overlapping genes in the genomes of two closely related species: Mycoplasma genitalium and Mycoplasma pneumoniae. Careful comparisons were made for homologous genes that are overlapped in one species but not in the other. This comparative analysis allows us to propose a model of how overlapping genes emerged in the course of evolution. It was found that overlapping genes were generated primarily due to the loss of a stop codon in either gene, in many cases, the absence of which resulted in elongation of the 3' end of the gene's coding region. More specifically, the loss of the stop codon took place as a result of the following events: deletion of the stop codon (64.4%), point mutation at the stop codon (4.4%), and frame shift at the end of the coding region (6.7%). Overlapping genes, in a sense, can be thought of as the results of evolutionary pressure to minimize genome size. However, our analysis indicates that many overlapping genes, at least in the genomes of M.genitalium and M.pneumoniae, are due to incidental elongation of the coding regions.