An upsurge in the bioeconomy drives the need for engineering microorganisms with increasingly complex phenotypes. Gains in productivity of industrial microbes depend on the development of improved strains. Classical strain improvement programmes for the generation, screening and isolation of such mutant strains have existed for several decades. An alternative to traditional strain improvement methods, genome shuffling, allows the directed evolution of whole organisms via recursive recombination at the genome level. This review deals chiefly with the technical aspects of genome shuffling. It first presents the diversity of organisms and phenotypes typically evolved using this technology and then reviews available sources of genetic diversity and recombination methodologies. Analysis of the literature reveals that genome shuffling has so far been restricted to microorganisms, both prokaryotes and eukaryotes, with an overepresentation of antibiotics- and biofuel-producing microbes. Mutagenesis is the main source of genetic diversity, with few studies adopting alternative strategies. Recombination is usually done by protoplast fusion or sexual recombination, again with few exceptions. For both diversity and recombination, prospective methods that have not yet been used are also presented. Finally, the potential of genome shuffling for gaining insight into the genetic basis of complex phenotypes is also discussed.