Soils sustain an immense diversity of microbes, which, to a large extent, remains unexplored. A range of novel methods, most of which are based on rRNA and rDNA analyses, have uncovered part of the soil microbial diversity. The next step in the era of microbial ecology is to extract genomic, evolutionary and functional information from bacterial artificial chromosome libraries of the soil community genomes (the metagenome). Sophisticated analyses that apply molecular phylogenetics, DNA microarrays, functional genomics and in situ activity measurements will provide huge amounts of new data, potentially increasing our understanding of the structure and function of soil microbial ecosystems, and the interactions that occur within them. This review summarizes the recent progress in studies of soil microbial communities with focus on novel methods and approaches that provide new insight into the relationship between phylogenetic and functional diversity.