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Abstract Contamination of genomes is an increasingly recognized problem affecting several downstream applications, from comparative evolutionary genomics to metagenomics. Here we introduce ContScout, a precise tool for eliminating foreign sequences from annotated genomes. It achieves high specificity and sensitivity on synthetic benchmark data even when the contaminant is a closely related species, outperforms competing tools, and can distinguish horizontal gene transfer from contamination. A screen of 844 eukaryotic genomes for contamination identified bacteria as the most common source, followed by fungi and plants. Furthermore, we show that contaminants in ancestral genome reconstructions lead to erroneous early origins of genes and inflate gene loss rates, leading to a false notion of complex ancestral genomes. Taken together, we offer here a tool for sensitive removal of foreign proteins, identify and remove contaminants from diverse eukaryotic genomes and evaluate their impact on phylogenomic analyses.