Small RNAs (sRNAs) are widespread in bacteria and play critical roles in regulating physiological processes. They are best characterized in Escherichia coli K-12 MG1655, where 83 sRNAs constitute nearly 2% of the gene complement. Most sRNAs act by base pairing with a target mRNA, modulating its translation and/or stability; many of these RNAs share only limited complementarity to their mRNA target, and require the chaperone Hfq to facilitate base pairing. Little is known about the evolutionary dynamics of bacterial sRNAs. Here, we apply phylogenetic and network analyses to investigate the evolutionary processes and principles that govern sRNA gene distribution in 27 E. coli and Shigella genomes. We identify core (encoded in all 27 genomes) and variable sRNAs; more than two-thirds of the E. coli K-12 MG1655 sRNAs are core, whereas the others show patterns of presence and absence that are principally due to genetic loss, not duplication or lateral genetic transfer. We present evidence that variable sRNAs are less tightly integrated into cellular genetic regulatory networks than are the core sRNAs, and that Hfq facilitates posttranscriptional cross talk between the E. coli-Shigella core and variable genomes. Finally, we present evidence that more than 80% of genes targeted by Hfq-associated core sRNAs have been transferred within the E. coli-Shigella clade, and that most of these genes have been transferred intact. These results suggest that Hfq and sRNAs help integrate laterally acquired genes into established regulatory networks.