Wolbachia are widely distributed intracellular bacteria that cause a number of reproductive alterations in their eukaryotic hosts. Such alterations include the induction of parthenogenesis, feminization, cytoplasmic incompatibility, and male killing [1-11]. These important bacteria may play a role in rapid speciation in insects [12-14], and there is growing interest in their potential uses as tools for biological control and genetic manipulation of pests and disease vectors [15-16]. Here, we show recombination in the Wolbachia outer surface protein gene (wsp) between strains of Wolbachia. In addition, we find a possible ecological context for this recombination. Evidence indicates either genetic exchange between Wolbachia in a parasitoid wasp and in the fly that it parasitizes or horizontal transfer of Wolbachia between the parasitoid and the fly, followed by a recombination event. Results have important implications for the evolution of these bacteria and the potential use of Wolbachia in biological control.