Most models of genome size evolution emphasize changes in relative rates of and/or the efficacy of selection on insertions and deletions. However, transposable elements (TEs) are a major contributor to genome size evolution, and since they experience their own selective pressures for expansion, genome size changes may in part be driven by the dynamics of co-evolution between TEs and their hosts. Under this perspective, predictions about the conditions that allow for genome expansion may be altered. In this review, we outline the evidence for TE-host co-evolution, discuss the conditions under which these dynamics can change, and explore the possible contribution to the evolution of genome size. Aided partly by advances in our understanding of the mechanisms of TE silencing via small RNAs, there is growing evidence that the evolution of transposition rates can be important in driving genome expansion and contraction. Shifts in genome size and transposon abundance associated with interspecific hybridization and changes in mating system are consistent with an important role for transposition rate evolution, although other possible explanations persist. More understanding of the potential for the breakdown of host silencing mechanisms and/or the potential for TEs to evade host immune responses will improve our understanding of the importance of changes in TE activity in driving genome size evolution.