An emerging theme in medical microbiology is that extensive variation exists in gene content among strains of many pathogenic bacterial species. However, this topic has not been investigated on a genome scale with strains recovered from patients with well-defined clinical conditions. Staphylococcus aureus is a major human pathogen and also causes economically important infections in cows and sheep. A DNA microarray representing >90% of the S. aureus genome was used to characterize genomic diversity, evolutionary relationships, and virulence gene distribution among 36 strains of divergent clonal lineages, including methicillin-resistant strains and organisms causing toxic shock syndrome. Genetic variation in S. aureus is very extensive, with ≈22% of the genome comprised of dispensable genetic material. Eighteen large regions of difference were identified, and 10 of these regions have genes that encode putative virulence factors or proteins mediating antibiotic resistance. We find that lateral gene transfer has played a fundamental role in the evolution of S. aureus. The mec gene has been horizontally transferred into distinct S. aureus chromosomal backgrounds at least five times, demonstrating that methicillin-resistant strains have evolved multiple independent times, rather than from a single ancestral strain. This finding resolves a long-standing controversy in S. aureus research. The epidemic of toxic shock syndrome that occurred in the 1970s was caused by a change in the host environment, rather than rapid geographic dissemination of a new hypervirulent strain. DNA microarray analysis of large samples of clinically characterized strains provides broad insights into evolution, pathogenesis, and disease emergence.