Division of labor can evolve when social groups benefit from the functional specialisation of its members. Recently, a novel means of coordinating division of labor was found in the antibiotic-producing bacterium Streptomyces coelicolor, where functionally specialized cells are generated through large-scale genomic re-organisation. Here, we investigate how the evolution of a genome architecture enables such mutation-driven division of labor, using a multi-scale mathematical model of bacterial evolution. We let bacteria compete on the basis of their antibiotic production and growth rate in a spatially structured environment. Bacterial behavior is determined by the structure and composition of their genome, which encodes antibiotics, growth-promoting genes and fragile genomic loci that can induce chromosomal deletions. We find that a genomic organization evolves that partitions growth-promoting genes and antibiotic-coding genes to distinct parts of the genome, separated by fragile genomic loci. Mutations caused by these fragile sites mostly delete growth-promoting genes, generating antibiotic-producing mutants from non-producing (and weakly-producing) progenitors, in agreement with experimental observations. Mutants protect their colony from competitors but are themselves unable to replicate. We further show that this division of labor enhances the local competition between colonies by promoting antibiotic diversity. These results show that genomic organisation can co-evolve with genomic instabilities to enable reproductive division of labor.