Staphylococcus aureus is a bacterial pathogen known to cause infections in epidemic waves. One such epidemic was caused by a clone known as phage-type 80/81, a penicillin-resistant strain that rose to world prominence in the late 1950s. The molecular underpinnings of the phage-type 80/81 outbreak have remained unknown for decades, nor is it understood why related S. aureus clones became epidemic in hospitals in the early 1990s. To better understand the molecular basis of these epidemics, we sequenced the genomes of eight S. aureus clinical isolates representative of the phage-type 80/81 clone, the Southwest Pacific clone [a community-associated methicillin-resistant S. aureus (MRSA) clone], and contemporary S. aureus clones, all of which are genetically related and belong to the same clonal complex (CC30). Genome sequence analysis revealed that there was coincident divergence of these clones from a recent common ancestor, a finding that resolves controversy about the evolutionary history of the lineage. Notably, we identified nonsynonymous SNPs in genes encoding accessory gene regulator C (agrC) and α-hemolysin (hla)-molecules important for S. aureus virulence-that were present in virtually all contemporary CC30 hospital isolates tested. Compared with the phage-type 80/81 and Southwest Pacific clones, contemporary CC30 hospital isolates had reduced virulence in mouse infection models, the result of SNPs in agrC and hla. We conclude that agr and hla (along with penicillin resistance) were essential for world dominance of phage-type 80/81 S. aureus, whereas key SNPs in contemporary CC30 clones restrict these pathogens to hospital settings in which the host is typically compromised.