Background Mycoplasma agalactiae , causing agent of contagious agalactia, infects domestic small ruminants such as sheep and goats but also wild Caprinae. M. agalactiae is highly contagious and transmitted through oral, respiratory, and mammary routes spreading rapidly in an infected herd. Results In an outbreak of contagious agalactia in a mixed herd of sheep and goats, 80% of the goats were affected displaying swollen udders and loss of milk production but no other symptom such as kerato-conjunctivitis, arthritis or pulmonary distress commonly associated to contagious agalactia. Surprisingly, none of the sheep grazing on a common pasture and belonging to the same farm as the goats were affected. Whole genome sequencing and analysis of M. agalactiae strain GrTh01 isolated from the outbreak, revealed a previously unknown sequence type, ST35, and a particularly small, genome size of 841′635 bp when compared to others available in public databases. Overall, GrTh01 displayed a reduced accessory genome, with repertoires of gene families encoding variable surface proteins involved in host-adhesion and variable antigenicity being scaled down. GrTh01 was also deprived of Integrative Conjugative Element or prophage, and had a single IS element, suggesting that GrTh01 has a limited capacity to adapt and evolve. Conclusions The lack of most of the variable antigens and the Integrative Conjugative Element, both major virulence- and host specificity factors of a M. agalactiae strain isolated from an outbreak affecting particularly goats, indicates the implication of these factors in host specificity. Whole genome sequencing and full assembly of bacterial pathogens provides a most valuable tool for epidemiological and virulence studies of M. agalactiae without experimental infections.