Microsatellites (short tandem polynucleotide repeats) are found throughout eukaryotic genomes at frequencies many orders of magnitude higher than the frequencies predicted to occur by chance. Most of these microsatellites appear to have evolved in a generally neutral manner. In contrast, microsatellites are generally absent from bacterial genomes except in locations where they provide adaptive functional variability, and these appear to have evolved under selection. We demonstrate a mutational bias towards deletion (repeat contraction) in a native chromosomal microsatellite of the bacterium Mycoplasma gallisepticum, through the collection and analysis of independent mutations in the absence of natural selection. Using this and similar existing data from two other bacterial species and four eukaryotic species, we find strong evidence that deletion biases resulting in repeat contraction are common in bacteria, while eukaryotic microsatellites generally experience unbiased mutation or a bias towards insertion (repeat expansion). This difference in mutational bias suggests that eukaryotic microsatellites should generally expand wherever selection does not exclude them, whereas bacterial microsatellites should be driven to extinction by mutational pressure wherever they are not maintained by selection. This is consistent with observed bacterial and eukaryotic microsatellite distributions. Hence, mutational biases that differ between eukaryotes and bacteria can account for many of the observed differences in microsatellite DNA content and distribution found in these two groups of organisms.