Avian malaria parasites are prevalent around the world, and infect a wide diversity of bird species. Here we report the sequencing and analysis of high quality draft genome sequences for two avian malaria species, Plasmodium relictum and Plasmodium gallinaceum. We identify 50 genes that are specific to avian malaria, located in an otherwise conserved core of the genome that shares gene synteny with all other sequenced malaria genomes. Phylogenetic analysis suggests that the avian malaria species form an outgroup to the mammalian Plasmodium species. Consistent with their phylogenetic position, we identify orthologs of genes that had previously appeared to be restricted to the clades of parasites containing P. falciparum and P. vivax - the species with the greatest impact on human health. The subtelomeres of P. relictum and P. gallinaceum contain several novel gene families, including an expanded surf multigene family. We also identify an expansion of reticulocyte binding protein homologs in P. relictum and within these proteins proteins, we detect distinct regions that are specific to non-human primate, humans, rodent and avian hosts. For the first time in the Plasmodium lineage we find evidence of transposable elements, including several hundred fragments of LTR-retrotransposons in both species and an apparently complete LTR-retrotransposon in the genome of P. gallinaceum.