Access to genome sequence data has challenged traditional natural product discovery paradigms by revealing that the products of most bacterial biosynthetic pathways have yet to be discovered. Despite the insight afforded by this technology, little is known about the diversity and distributions of natural product biosynthetic pathways among bacteria and how they evolve to generate structural diversity. Here we analyze genome sequence data derived from 75 strains of the marine actinomycete genus Salinispora for pathways associated with polyketide and nonribosomal peptide biosynthesis, the products of which account for some of today’s most important medicines. The results reveal high levels of diversity, with a total of 124 pathways identified and 229 predicted with continued sequencing. Recent horizontal gene transfer accounts for the majority of pathways, which occur in only one or two strains. Acquired pathways are incorporated into genomic islands and are commonly exchanged within and between species. Acquisition and transfer events largely involve complete pathways, which subsequently evolve by gene gain, loss, and duplication followed by divergence. The exchange of similar pathway types at the precise chromosomal locations in different strains suggests that the mechanisms of integration include pathway-level homologous recombination. Despite extensive horizontal gene transfer there is clear evidence of species-level vertical inheritance, supporting the concept that secondary metabolites represent functional traits that help define Salinispora species. The plasticity of the Salinispora secondary metabolome provides an effective mechanism to maximize population-level secondary metabolite diversity while limiting the number of pathways maintained within any individual genome.