Cryptophyte and chlorarachniophyte algae are transitional forms in the widespread secondary endosymbiotic acquisition of photosynthesis by engulfment of eukaryotic algae. Unlike most secondary plastid-bearing algae, miniaturized versions of the endosymbiont nuclei (nucleomorphs) persist in cryptophytes and chlorarachniophytes. To determine why, and to address other fundamental questions about eukaryote-eukaryote endosymbiosis, we sequenced the nuclear genomes of the cryptophyte Guillardia theta and the chlorarachniophyte Bigelowiella natans. Both genomes have >21,000 protein genes and are intron rich, and B. natans exhibits unprecedented alternative splicing for a single-celled organism. Phylogenomic analyses and subcellular targeting predictions reveal extensive genetic and biochemical mosaicism, with both host- and endosymbiont-derived genes servicing the mitochondrion, the host cell cytosol, the plastid and the remnant endosymbiont cytosol of both algae. Mitochondrion-to-nucleus gene transfer still occurs in both organisms but plastid-to-nucleus and nucleomorph-to-nucleus transfers do not, which explains why a small residue of essential genes remains locked in each nucleomorph.