A common biological pathway reconstruction approach—as implemented by many automatic biological pathway services (such as the KAAS and RAST servers) and the functional annotation of metagenomic sequences—starts with the identification of protein functions or families (e.g., KO families for the KEGG database and the FIG families for the SEED database) in the query sequences, followed by a direct mapping of the identified protein families onto pathways. Given a predicted patchwork of individual biochemical steps, some metric must be applied in deciding what pathways actually exist in the genome or metagenome represented by the sequences. Commonly, and straightforwardly, a complete biological pathway can be identified in a dataset if at least one of the steps associated with the pathway is found. We report, however, that this naïve mapping approach leads to an inflated estimate of biological pathways, and thus overestimates the functional diversity of the sample from which the DNA sequences are derived. We developed a parsimony approach, called MinPath (Minimal set of Pathways), for biological pathway reconstructions using protein family predictions, which yields a more conservative, yet more faithful, estimation of the biological pathways for a query dataset. MinPath identified far fewer pathways for the genomes collected in the KEGG database—as compared to the naïve mapping approach—eliminating some obviously spurious pathway annotations. Results from applying MinPath to several metagenomes indicate that the common methods used for metagenome annotation may significantly overestimate the biological pathways encoded by microbial communities. Even though there is only a single large biological network within any cell and all pathways are to some extent connected, the partition of the entire cellular network into smaller units (e.g., KEGG pathways) is extremely important for understanding biological processes. Biological pathway reconstruction, therefore, is essential for understanding the biological functions that a newly sequenced genome encodes and recently for studying the functionality of a natural environment via metagenomics. The common practice of pathway reconstruction in metagenomics first identifies functions encoded by the metagenomic sequences and then reconstructs pathways from the annotated functions by mapping the functions to reference pathways. To address the issues of both incomplete data (e.g., metagenomes, unlike individual genomes, are most likely incomplete) and pathway redundancy (e.g., the same function is involved in multiple pathway units), we formulate a parsimony version of the pathway reconstruction/inference problem, called MinPath (Minimal set of Pathways): given a set of reference pathways and a set of functions that can be mapped to one or more pathways, MinPath aims at finding a minimum number of pathways that can explain all functions. MinPath achieves a more conservative, yet more faithful, estimation of the biological pathways encoded by genomes and metagenomes.