Each MLB club is permitted to reserve no more than 40 players on its MLB Reserve List, which is why the MLB Reserve List is also called the "40-man roster."
Each MLB club is permitted to roster a maximum of 25 players on its MLB Active List (also known as the "25-man roster") beginning at 3:00 PM (Eastern) on MLB Opening Day up through 11:59 PM (Eastern) on August 31st, and then the Active List roster limit is increased to a maximum of 40 players beginning on September 1st and extending through the last game of the MLB regular season. The Active List maximum roster limit reverts back to 25 players again for post-season play (LDS, LCS, and World Series). If MLB regular season games are scheduled prior to MLB Opening Day (for example, if MLB games are played in Japan, Mexico, Australia, etc), the MLB Commissioner will determine the Active List maximum roster limit for those games.
Each MLB club is required to roster a minimum of 24 players on its MLB Active List during the MLB regular season (and post-season), but in the event of an unusual or unavoidable circumstance (such as a multi-player trade or multiple trades made at about the same time where several players have been acquired but have not yet arrived), a club's MLB Active List can temporarily go below 24 players, but for no more than 48 hours. (Even though an MLB club could play with a 24-man MLB Active Roster for an entire season (and save about $500K in payroll by doing so), in practice and by convention no MLB club would do that unless all clubs did).
No more than 16 players on a club's MLB Reserve List (40-man roster) may be on Optional Assignment at any one time.
A player who is optioned to the minors generally must remain on Optional Assignment for at least ten days. (A player optioned to the minors during Spring Training generally must remain on Optional Assignment for the first ten days of the MLB regular season). The only exceptions are if the player is recalled as the "26th man" for a day where a doubleheader was scheduled at least 48 hours in advance (or for the second game of the doubleheader only if the doubleheader was scheduled less than 48 hours in advance), or is recalled to replace a player on the 25-man roster who is placed on an MLB inactive list (Disabled List, Bereavement List, Paternity List, Restricted List, et al), or if the season (including post-season playoffs) of the minor league team to which the player is assigned is over, or if the player is traded.
A club can recall a player from a minor league Optional Assignment and place the player on its "Taxi Squad" for one day. If the player is not added to his club's MLB Active List by 3 PM (Eastern) the next day or at least three hours prior to the scheduled start of the next day's game (whichever is later), the player must be removed from the Taxi Squad and returned to his minor league assignment. A player on the Taxi Squad does not count against his club's MLB Active List, and the player does not accrue MLB Service Time while on the Taxi Squad. The most common reason to recall a player and place him on the Taxi Squad is when a club is considering whether to place a player on the Disabled List but has not yet decided.
Beginning on MLB Opening Day up through August 31st, a club can temporarily add a 26th player to its MLB Active List on any day where two games are scheduled, as long as the second game was scheduled at least 48 hours in advance. If the second game was scheduled less than 48 hours in advance, a 26th man can be temporarily added to a club's MLB Active List for the second game only.
1. The "26th man" must be on the club's MLB Reserve List (40-man roster) or has to be added to the club's 40-man roster that day.
2. The "26th man" does not have to be a pitcher.
3. In the case of a second game being scheduled at least 48 hours in advance, the 26-man Active List limit is in effect for both games, but the "26th man" cannot be switched between games.
4. A minor league player can be added to a club's Active List as the "26th man" even if he has not spent ten days on Optional Assignment (or Outright Assignment) prior to being added.
5. A "26th man" can remain on the Active List and a different player can be dropped the next day, as long as the "26th man" was not called up from the minors prior to spending at least ten days on Optional or Outright Assignment. However, a player called up as the "26th man" prior to spending at least ten days on Optional or Outright Assignment could remain on the 25-man roster if the player replaces a player who is placed on the Disabled List (or other MLB inactive list) the next day.
6. If a player is recalled as the "26th man" and is optioned or outrighted back to the minors the next day, the "10-day rule" clock (prohibiting a player from being recalled until he has spent at least ten days on Optional or Outright Assignment, unless he is replacing a player who is placed on the DL or other MLB inactive list) does not start over again. However many days toward ten that the player spent on Optional or Outright Assignment prior to being recalled as the "26th man" counts toward the ten days.
7. The "26th man" accrues one day of MLB Service Time.