The most intensely studied of the Vibrio vulnificus virulence factors is the capsular polysaccharide (CPS). All virulent strains produce copious amounts of CPS. Acapsular strains are avirulent. The structure of the CPS from the clinical isolate ATCC 27562 is unusual. It is serine modified and contains, surprisingly, N-acetylmuramic acid. We identified the complete 25-kb CPS biosynthesis locus from ATCC 27562. It contained 21 open reading frames and was allelic to O-antigen biosynthesis loci. Two of the genes, murA(CPS) and murB(CPS), were paralogs of the murA(PG) and murB(PG) genes of the peptidoglycan biosynthesis pathway; only a single copy of these genes is present in the strain CMCP6 and YJ016 genomes. Although MurA(CPS) and MurB(CPS) were functional when expressed in Escherichia coli, lesions in either gene had no effect on CPS production, virulence, or growth in V. vulnificus; disruption of 8 other genes within the locus resulted in an acapsular phenotype and attenuated virulence. Thus, murA(CPS) and murB(CPS) were functional but redundant. Comparative genomic analysis revealed that while completely different CPS biosynthesis loci were found in the same chromosomal region in other V. vulnificus strains, most of the CPS locus of ATCC 27562 was conserved in another marine bacterium, Shewanella putrefaciens strain 200. However, the average GC content of the CPS locus was significantly lower than the average GC content of either genome. Furthermore, several of the encoded proteins appeared to be of Gram-positive and archaebacterial origin. These data indicate that the horizontal transfer of intact and partial CPS loci drives CPS diversity in marine bacteria.