Genome sequences are available for many bacterial strains, but there has been little progress in using these data to understand the molecular basis of pathogen emergence and differences in strain virulence. Serotype M3 strains of group A Streptococcus (GAS) are a common cause of severe invasive infections with unusually high rates of morbidity and mortality. To gain insight into the molecular basis of this high-virulence phenotype, we sequenced the genome of strain MGAS315, an organism isolated from a patient with streptococcal toxic shock syndrome. The genome is composed of 1,900,521 bp, and it shares ≈1.7 Mb of related genetic material with genomes of serotype M1 and M18 strains. Phage-like elements account for the great majority of variation in gene content relative to the sequenced M1 and M18 strains. Recombination produces chimeric phages and strains with previously uncharacterized arrays of virulence factor genes. Strain MGAS315 has phage genes that encode proteins likely to contribute to pathogenesis, such as streptococcal pyrogenic exotoxin A (SpeA) and SpeK, streptococcal superantigen (SSA), and a previously uncharacterized phospholipase A₂ (designated Sla). Infected humans had anti-SpeK, -SSA, and -Sla antibodies, indicating that these GAS proteins are made in vivo. SpeK and SSA were pyrogenic and toxic for rabbits. Serotype M3 strains with the phage-encoded speK and sla genes increased dramatically in frequency late in the 20th century, commensurate with the rise in invasive disease caused by M3 organisms. Taken together, the results show that phage-mediated recombination has played a critical role in the emergence of a new, unusually virulent clone of serotype M3 GAS.