Understanding the genetic basis of host shifts is a key genomic question for pathogen and parasite biology. The Bacillus cereus group, which encompasses Bacillus thuringiensis and Bacillus anthracis, contains pathogens that can infect insects, nematodes, and vertebrates. Since the target range of the essential virulence factors (Cry toxins) and many isolates is well known, this group presents a powerful system for investigating how pathogens can diversify and adapt to phylogenetically distant hosts. Specialization to exploit insects occurs at the level of the major clade and is associated with substantial changes in the core genome, and host switching between insect orders has occurred repeatedly within subclades. The transfer of plasmids with linked cry genes may account for much of the adaptation to particular insect orders, and network analysis implies that host specialization has produced strong associations between key toxin genes with similar targets. Analysis of the distribution of plasmid minireplicons shows that plasmids with orf156 and orf157, which carry genes encoding toxins against Lepidoptera or Diptera, were contained only by B. thuringiensis in the specialized insect clade (clade 2), indicating that tight genome/plasmid associations have been important in adaptation to invertebrate hosts. Moreover, the accumulation of multiple virulence factors on transposable elements suggests that cotransfer of diverse virulence factors is advantageous in terms of expanding the insecticidal spectrum, overcoming insect resistance, or through gains in pathogenicity via synergistic interactions between toxins.