Teleosts comprise more than half of all vertebrate species and have adapted to a variety of marine and freshwater habitats. Their genome evolution and diversification are important subjects for the understanding of vertebrate evolution. Although draft genome sequences of two pufferfishes have been published, analysis of more fish genomes is desirable. Here we report a high-quality draft genome sequence of a small egg-laying freshwater teleost, medaka (Oryzias latipes). Medaka is native to East Asia and an excellent model system for a wide range of biology, including ecotoxicology, carcinogenesis, sex determination and developmental genetics. In the assembled medaka genome (700 megabases), which is less than half of the zebrafish genome, we predicted 20,141 genes, including approximately 2,900 new genes, using 5'-end serial analysis of gene expression tag information. We found single nucleotide polymorphisms (SNPs) at an average rate of 3.42% between the two inbred strains derived from two regional populations; this is the highest SNP rate seen in any vertebrate species. Analyses based on the dense SNP information show a strict genetic separation of 4 million years (Myr) between the two populations, and suggest that differential selective pressures acted on specific gene categories. Four-way comparisons with the human, pufferfish (Tetraodon), zebrafish and medaka genomes revealed that eight major interchromosomal rearrangements took place in a remarkably short period of approximately 50 Myr after the whole-genome duplication event in the teleost ancestor and afterwards, intriguingly, the medaka genome preserved its ancestral karyotype for more than 300 Myr.