Microorganisms with simplified genomes represent interesting cell chassis for systems and synthetic biology. However, genome reduction can lead to undesired traits, such as decreased growth rate and metabolic imbalances. To investigate the impact of genome reduction on Escherichia coli strain DGF-298, a strain in which ~ 36% of the genome has been removed, we reconstructed a strain-specific metabolic model (iAC1061), investigated the regulation of gene expression using iModulon-based transcriptome analysis, and performed adaptive laboratory evolution to let the strain correct potential imbalances that arose during its simplification. The model notably predicted that the removal of all three key pathways for glycolaldehyde disposal in this microorganism would lead to a metabolic bottleneck through folate starvation. Glycolaldehyde is also known to cause self-generation of reactive oxygen species, as evidenced by the increased expression of oxidative stress resistance genes in the SoxS iModulon. The reintroduction of the aldA gene, responsible for one native glycolaldehyde disposal route, alleviated the constitutive oxidative stress response. Our results suggest that systems-level approaches and adaptive laboratory evolution have additive benefits when trying to repair and optimize genome-engineered strains. IMPORTANCE Genomic streamlining can be employed in model organisms to reduce complexity and enhance strain predictability. One of the most striking examples is the bacterial strain Escherichia coli DGF-298, notable for having over one-third of its genome deleted. However, such extensive genome modifications raise the question of how similar this simplified cell remains when compared with its parent, and what are the possible unintended consequences of this simplification. In this study, we used metabolic modeling along with iModulon-based transcriptomic analysis in different growth conditions to assess the impact of genome reduction on metabolism and gene regulation. We observed little impact of genomic reduction on the regulatory network of E. coli DGF-298 and identified a potential metabolic bottleneck leading to the constitutive activity of the SoxS iModulon. We then leveraged the model's predictions to successfully restore SoxS activity to the basal level.