Bathymodiolus mussels live in symbiosis with intracellular sulfur-oxidizing (SOX) bacteria that provide them with nutrition. We sequenced the SOX symbiont genomes from two Bathymodiolus species. Comparison of these symbiont genomes with those of their closest relatives revealed that the symbionts have undergone genome rearrangements, and up to 35% of their genes may have been acquired by horizontal gene transfer. Many of the genes specific to the symbionts were homologs of virulence genes. We discovered an abundant and diverse array of genes similar to insecticidal toxins of nematode and aphid symbionts, and toxins of pathogens such as Yersinia and Vibrio. Transcriptomics and proteomics revealed that the SOX symbionts express the toxin-related genes (TRGs) in their hosts. We hypothesize that the symbionts use these TRGs in beneficial interactions with their host, including protection against parasites. This would explain why a mutualistic symbiont would contain such a remarkable 'arsenal' of TRGs.