Mycobacterium abscessus
is a rapid growing, free-living species of bacterium that also causes lung infections in humans. Human infections are usually acquired from the environment; however, dominant circulating clones (DCCs) have emerged recently in both
M. abscessus
subsp.
massiliense
and subsp. abscessus that appear to be transmitted among humans and are now globally distributed. These recently emerged clones are potentially informative about the ecological and evolutionary mechanisms of pathogen emergence and host adaptation. The geographical distribution of DCCs has been reported, but the genomic processes underlying their transition from environmental bacterium to human pathogen are not well characterized. To address this knowledge gap, we delineated the structure of
M. abscessus
subspecies
abscessus
and massiliense using genomic data from 200 clinical isolates of
M. abscessus
from seven geographical regions. We identified differences in overall patterns of lateral gene transfer (LGT) and barriers to LGT between subspecies and between environmental and host-adapted bacteria. We further characterized genome reorganization that accompanied bacterial host adaptation, inferring selection pressures acting at both genic and intergenic loci. We found that both subspecies encode an expansive pangenome with many genes at rare frequencies. Recombination appears more frequent in
M. abscessus
subsp.
massiliense
than in subsp. abscessus, consistent with prior reports. We found evidence suggesting that phage are exchanged between subspecies, despite genetic barriers evident elsewhere throughout the genome. Patterns of LGT differed according to niche, with less LGT observed among host-adapted DCCs versus environmental bacteria. We also found evidence suggesting that DCCs are under distinct selection pressures at both genic and intergenic sites. Our results indicate that host adaptation of
M. abscessus
was accompanied by major changes in genome evolution, including shifts in the apparent frequency of LGT and impacts of selection. Differences were evident among the DCCs as well, which varied in the degree of gene content remodelling, suggesting they were placed differently along the evolutionary trajectory toward host adaptation. These results provide insight into the evolutionary forces that reshape bacterial genomes as they emerge into the pathogenic niche.