New microbial genomes are sequenced at a high pace, allowing insight into the genetics of not only cultured microbes, but a wide range of metagenomic collections such as the human microbiome. To understand the deluge of genomic data we face, computational approaches for gene functional annotation are invaluable. We introduce a novel model for computational annotation that refines two established concepts: annotation based on homology and annotation based on phyletic profiling. The phyletic profiling-based model that includes both inferred orthologs and paralogs-homologs separated by a speciation and a duplication event, respectively-provides more annotations at the same average Precision than the model that includes only inferred orthologs. For experimental validation, we selected 38 poorly annotated Escherichia coli genes for which the model assigned one of three GO terms with high confidence: involvement in DNA repair, protein translation, or cell wall synthesis. Results of antibiotic stress survival assays on E. coli knockout mutants showed high agreement with our model's estimates of accuracy: out of 38 predictions obtained at the reported Precision of 60%, we confirmed 25 predictions, indicating that our confidence estimates can be used to make informed decisions on experimental validation. Our work will contribute to making experimental validation of computational predictions more approachable, both in cost and time. Our predictions for 998 prokaryotic genomes include ~400000 specific annotations with the estimated Precision of 90%, ~19000 of which are highly specific-e.g. "penicillin binding," "tRNA aminoacylation for protein translation," or "pathogenesis"-and are freely available at http://gorbi.irb.hr/.