Pseudomonas fluorescens is of agricultural and economic importance as a biological control agent largely because of its plant association and production of secondary metabolites, in particular 2,4-diacetylphloroglucinol (2,4-DAPG). This polyketide, which is encoded by the eight-gene phl cluster, has antimicrobial effects on phytopathogens, promotes amino acid exudation from plant roots, and induces systemic resistance in plants. Despite its importance, 2,4-DAPG production is limited to a subset of P. fluorescens strains. Determination of the evolution of the phl cluster and understanding the selective pressures promoting its retention or loss in lineages of P. fluorescens will help in the development of P. fluorescens as a viable and effective inoculant for application in agriculture. In this study, genomic and sequence-based approaches were integrated to reconstruct the phylogeny of P. fluorescens and the phl cluster. It was determined that 2,4-DAPG production is an ancestral trait in the species P. fluorescens but that most lineages have lost this capacity through evolution. Furthermore, intragenomic recombination has relocated the phl cluster within the P. fluorescens genome at least three times, but the integrity of the cluster has always been maintained. The possible evolutionary and functional implications for retention of the phl cluster and 2,4-DAPG production in some lineages of P. fluorescens are discussed.