Lactococcus garvieae causes fatal haemorrhagic septicaemia in fish such as yellowtail. The comparative analysis of genomes of a virulent strain Lg2 and a non-virulent strain ATCC 49156 of L. garvieae revealed that the two strains shared a high degree of sequence identity, but Lg2 had a 16.5-kb capsule gene cluster that is absent in ATCC 49156. The capsule gene cluster was composed of 15 genes, of which eight genes are highly conserved with those in exopolysaccharide biosynthesis gene cluster often found in Lactococcus lactis strains. Sequence analysis of the capsule gene cluster in the less virulent strain L. garvieae Lg2-S, Lg2-derived strain, showed that two conserved genes were disrupted by a single base pair deletion, respectively. These results strongly suggest that the capsule is crucial for virulence of Lg2. The capsule gene cluster of Lg2 may be a genomic island from several features such as the presence of insertion sequences flanked on both ends, different GC content from the chromosomal average, integration into the locus syntenic to other lactococcal genome sequences, and distribution in human gut microbiomes. The analysis also predicted other potential virulence factors such as haemolysin. The present study provides new insights into understanding of the virulence mechanisms of L. garvieae in fish.