Although mycoplasma can live in complex media in the laboratory, in nature they are always found living parasitically, attached to other cells. Since they take preformed nutrients from other cells, they have streamlined their metabolism and only have about 470 genes to use to make all the proteins needed for cell division, energy production, and protein synthesis, etc. These are the simplest cells found so far.
In 1990, Bob Folk at UT, using an electron microscope, observed 0.05 µm (50 nanometers) "nanobacteria" in rocks from hot springs. Nanobacteria were later found in blood, kidney stones, and in meteorites that came from Mars. Of course, this created quite a stir. But other researchers have not been able to find DNA or protein in nanobacteria, and it may be that the objects seen in the electron microscope are mineral microcrystals. Because of this, many experts doubt the existence of nanobacteria. But, supporters continue looking for evidence that nanobacteria are living.
A theoretical discussion of what could be the smallest bacterium possible gives a diameter of 0.17 µm. This figure also precludes the possibility of nanobacteria.
~Since nanobacteria can't be proven its existence yet, i guess Mycoplasma's d smallest bacteria at d moment.. :P~