Plastids (chloroplasts) harbor a small gene-dense genome that is amenable to genetic manipulation by transformation. During 1 billion years of evolution from the cyanobacterial endosymbiont to present-day chloroplasts, the plastid genome has undergone a dramatic size reduction, mainly as a result of gene losses and the large-scale transfer of genes to the nuclear genome. Thus the plastid genome can be regarded as a naturally evolved miniature genome, the gradual size reduction and compaction of which has provided a blueprint for the design of minimum genomes. Furthermore, because of the largely prokaryotic genome structure and gene expression machinery, the high transgene expression levels attainable in transgenic chloroplasts and the very low production costs in plant systems, the chloroplast lends itself to synthetic biology applications that are directed towards the efficient synthesis of green chemicals, biopharmaceuticals and other metabolites of commercial interest. This review describes recent progress with the engineering of plastid genomes with large constructs of foreign or synthetic DNA, and highlights the potential of the chloroplast as a model system in bottom-up and top-down synthetic biology approaches.