Insertion sequences (ISs) are simple transposable elements present in most bacterial and archaeal genomes and play an important role in genomic evolution. The recent expansion of sequenced genomes offers the opportunity to study ISs comprehensively, but this requires efficient and accurate tools for IS annotation. We have developed an open-source program called OASIS, or Optimized Annotation System for Insertion Sequences, which automatically annotates ISs within sequenced genomes. OASIS annotations of 1737 bacterial and archaeal genomes offered an unprecedented opportunity to examine IS evolution. At a broad scale, we found that most IS families are quite widespread; however, they are not present randomly across taxa. This may indicate differential loss, barriers to exchange and/or insufficient time to equilibrate across clades. The number of ISs increases with genome length, but there is both tremendous variation and no increase in IS density for genomes >2 Mb. At the finer scale of recently diverged genomes, the proportion of shared IS content falls sharply, suggesting loss and/or emergence of barriers to successful cross-infection occurs rapidly. Surprisingly, even after controlling for 16S rRNA sequence divergence, the same ISs were more likely to be shared between genomes labeled as the same species rather than as different species.