The whole genome analysis of two strains of the first intermediately pathogenic leptospiral species to be sequenced (Leptospira licerasiae strains VAR010 and MMD0835) provides insight into their pathogenic potential and deepens our understanding of leptospiral evolution. Comparative analysis of eight leptospiral genomes shows the existence of a core leptospiral genome comprising 1547 genes and 452 conserved genes restricted to infectious species (including L. licerasiae) that are likely to be pathogenicity-related. Comparisons of the functional content of the genomes suggests that L. licerasiae retains several proteins related to nitrogen, amino acid and carbohydrate metabolism which might help to explain why these Leptospira grow well in artificial media compared with pathogenic species. L. licerasiae strains VAR010T and MMD0835 possess two prophage elements. While one element is circular and shares homology with LE1 of L. biflexa, the second is cryptic and homologous to a previously identified but unnamed region in L. interrogans serovars Copenhageni and Lai. We also report a unique O-antigen locus in L. licerasiae comprised of a 6-gene cluster that is unexpectedly short compared with L. interrogans in which analogous regions may include >90 such genes. Sequence homology searches suggest that these genes were acquired by lateral gene transfer (LGT). Furthermore, seven putative genomic islands ranging in size from 5 to 36 kb are present also suggestive of antecedent LGT. How Leptospira become naturally competent remains to be determined, but considering the phylogenetic origins of the genes comprising the O-antigen cluster and other putative laterally transferred genes, L. licerasiae must be able to exchange genetic material with non-invasive environmental bacteria. The data presented here demonstrate that L. licerasiae is genetically more closely related to pathogenic than to saprophytic Leptospira and provide insight into the genomic bases for its infectiousness and its unique antigenic characteristics.