The spider mite Tetranychus urticae is a cosmopolitan agricultural pest with an extensive host plant range and an extreme record of pesticide resistance. Here we present the completely sequenced and annotated spider mite genome, representing the first complete chelicerate genome. At 90 megabases T. urticae has the smallest sequenced arthropod genome. Compared with other arthropods, the spider mite genome shows unique changes in the hormonal environment and organization of the Hox complex, and also reveals evolutionary innovation of silk production. We find strong signatures of polyphagy and detoxification in gene families associated with feeding on different hosts and in new gene families acquired by lateral gene transfer. Deep transcriptome analysis of mites feeding on different plants shows how this pest responds to a changing host environment. The T. urticae genome thus offers new insights into arthropod evolution and plant-herbivore interactions, and provides unique opportunities for developing novel plant protection strategies.