Ancestral genome reconstruction can be understood as a phylogenetic study with more details than a traditional phylogenetic tree reconstruction. We present a new computational system called REGEN for ancestral bacterial genome reconstruction at both the gene and replicon levels. REGEN reconstructs gene content, contiguous gene runs, and replicon structure for each ancestral genome. Along each branch of the phylogenetic tree, REGEN infers evolutionary events, including gene creation and deletion and replicon fission and fusion. The reconstruction can be performed by either a maximum parsimony or a maximum likelihood method. Gene content reconstruction is based on the concept of neighboring gene pairs. REGEN was designed to be used with any set of genomes that are sufficiently related, which will usually be the case for bacteria within the same taxonomic order. We evaluated REGEN using simulated genomes and genomes in the Rhizobiales order.