Prochlorococcus ecotypes are a useful system for exploring the origin and function of diversity among closely related microbes. The genetic variability between phenotypically distinct strains that differ by less that 1% in 16S ribosomal RNA sequences occurs mostly in genomic islands. Island genes appear to have been acquired in part by phage-mediated lateral gene transfer, and some are differentially expressed under light and nutrient stress. Furthermore, genome fragments directly recovered from ocean ecosystems indicate that these islands are variable among cooccurring Prochlorococcus cells. Genomic islands in this free-living photoautotroph share features with pathogenicity islands of parasitic bacteria, suggesting a general mechanism for niche differentiation in microbial species.