BACKGROUND: Pseudomonas fluorescens are common soil bacteria that can improve plant health through nutrient cycling, pathogen antagonism and induction of plant defenses. The genome sequences of strains SBW25 and Pf0-1 were determined and compared to each other and with P. fluorescens Pf-5. A functional genomic in vivo expression technology (IVET) screen provided insight into genes used by P. fluorescens in its natural environment and an improved understanding of the ecological significance of diversity within this species. RESULTS: Comparisons of three P. fluorescens genomes (SBW25, Pf0-1, Pf-5) revealed considerable divergence: 61% of genes are shared, the majority located near the replication origin. Phylogenetic and average amino acid identity analyses showed a low overall relationship. A functional screen of SBW25 defined 125 plant-induced genes including a range of functions specific to the plant environment. Orthologues of 83 of these exist in Pf0-1 and Pf-5, with 73 shared by both strains. The P. fluorescens genomes carry numerous complex repetitive DNA sequences, some resembling Miniature Inverted-repeat Transposable Elements (MITEs). In SBW25, repeat density and distribution revealed ‘repeat deserts’ lacking repeats, covering approximately 40% of the genome. CONCLUSIONS: P. fluorescens genomes are highly diverse. Strain-specific regions around the replication terminus suggest genome compartmentalization. The genomic heterogeneity among the three strains is reminiscent of a species complex rather than a single species. That 42% of plant-inducible genes were not shared by all strains reinforces this conclusion and shows that ecological success requires specialized and core functions. The diversity also indicates the significant size of genetic information within the Pseudomonas pan genome.