To investigate the molecular basis of the emergence of Aeromonas hydrophila responsible for an epidemic outbreak of motile aeromonad septicemia of catfish in the Southeastern United States, we sequenced 11 A. hydrophila isolates that includes five reference and six recent epidemic isolates. Comparative genomics revealed that recent epidemic A. hydrophila isolates are highly clonal, whereas reference isolates are greatly diverse. We identified 55 epidemic-associated genetic regions with 313 predicted genes that are present in epidemic isolates but absent from reference isolates and 35% of these regions are located within genomic islands, suggesting their acquisition through lateral gene transfer. The epidemic-associated regions encode predicted prophage elements, pathogenicity islands, metabolic islands, fitness islands and genes of unknown functions, and 34 of the genes encoded in these regions were predicted as virulence factors. We found two pilus biogenesis gene clusters encoded within predicted pathogenicity islands. A functional metabolic island that encodes a complete pathway for myo-inositol catabolism was evident by the ability of epidemic A. hydrophila isolates to use myo-inositol as a sole carbon source. Testing of A. hydrophila field isolates found a consistent correlation between myo-inositol utilization as a sole carbon source and the presence of an epidemic-specific genetic marker. All epidemic isolates and one reference isolate shared a novel O-antigen cluster. Altogether we identified four different O-antigen biosynthesis gene clusters within the 11 sequenced A. hydrophila genomes. Our study reveals new insights into the evolutionary changes that have resulted in the emergence of recent epidemic A. hydrophila strains.