Background: Lyme disease is caused by spirochete bacteria from the Borrelia burgdorferi sensu lato (B. burgdorferi s.l.) species complex. To reconstruct the evolution of B. burgdorferi s.l. and identify the genomic basis of its human virulence, we compared the genomes of 23 B. burgdorferi s.l. isolates from Europe and the United States, including B. burgdorferi sensu stricto (B. burgdorferi s.s., 14 isolates), B. afzelii (2), B. garinii (2), B. "bavariensis" (1), B. spielmanii (1), B. valaisiana (1), B. bissettii (1), and B. "finlandensis" (1). Results: Robust B. burgdorferi s.s. and B. burgdorferi s.l. phylogenies were obtained using genome-wide single-nucleotide polymorphisms, despite recombination. Phylogeny-based pan-genome analysis showed that the rate of gene acquisition was higher between species than within species, suggesting adaptive speciation. Strong positive natural selection drives the sequence evolution of lipoproteins, including chromosomally-encoded genes 0102 and 0404, cp26-encoded ospC and b08, and lp54-encoded dbpA, a07, a22, a33, a53, a65. Computer simulations predicted rapid adaptive radiation of genomic groups as population size increases. Conclusions: Intra-and inter-specific pan-genome sizes of B. burgdorferi s.l. expand linearly with phylogenetic diversity. Yet gene-acquisition rates in B. burgdorferi s.l. are among the lowest in bacterial pathogens, resulting in high genome stability and few lineage-specific genes. Genome adaptation of B. burgdorferi s.l. is driven predominantly by copy-number and sequence variations of lipoprotein genes. New genomic groups are likely to emerge if the current trend of B. burgdorferi s.l. population expansion continues.