Mycobacterium kansasii is a nontuberculous mycobacterium that can cause serious pulmonary disease. Genotyping suggested that the species is composed of at least six subtypes that vary in clinical significance, with subtype I being clinically dominant but less commonly isolated from environmental sources. Here we report a population genomics study of 358 M. kansasii isolates obtained from global water and clinical sources. Phylogenomic analyses revealed that the six subtypes are more accurately designated as closely related subspecies. These subspecies show ample evidence of recombination mediated by distributive conjugative transfer that has contributed to subspeciation and on-going diversification. Water was confirmed as a source of clinical infections by showing that genomes of clinical strains from an Australian outbreak were almost indistinguishable from strains contaminating the drinking water supply. Most clinical infections (nearly 80%) were due to a recently emerged group of strains designated the M. kansasii main complex (MKMC), which appears to have originated in Europe in 1900s and expanded globally over the past century. Comparative genomic analyses revealed that the MKMC has maintained the methylcitrate cycle and expanded ESX-I secretion-associated proteins, perhaps facilitating metabolic adaptation and pathogenicity for human hosts. Evidence of on-going positive selection in isolates of the MKMC was found in genes involved in carbon and secondary metabolism, metal ion homeostasis and cell surface remodeling that could represent adaptation to human hosts. These results further our understanding of the epidemiology and pathogenicity of M. kansasii and emphasize the importance of monitoring its potential transition to a more human-adapted pathogen.