As an etiological agent of bacterial sepsis and wound infections, Vibrio vulnificus is unique among the Vibrionaceae. The most intensely studied of its virulence factors is the capsular polysaccharide (CPS). Over 100 CPS types have been identified, yet little is known about the genetic mechanisms that drive such diversity. Chitin, the second-most-abundant polysaccharide in nature, is known to induce competence in Vibrio species. Here, we show that the frequency of chitin-induced transformation in V. vulnificus varies by strain and that (GlcNAc)(2) is the shortest chitin-derived polymer capable of inducing competence. Transformation frequencies (TFs) increased 8-fold when mixed-culture biofilms were exposed to a strain-specific lytic phage, suggesting that the lysis of dead cells during lytic infection increased the amount of extracellular DNA within the biofilm that was available for transfer. Furthermore, we show that V. vulnificus can undergo chitin-dependent carbotype conversion following the uptake and recombination of complete cps loci from exogenous genomic DNA (gDNA). The acquisition of a partial locus was also demonstrated when internal regions of homology between the endogenous and exogenous loci existed. This suggested that the same mechanism governing the transfer of complete cps loci also contributed to their evolution by generating novel combinations of CPS biosynthesis genes. Since no evidence that cps loci were preferentially acquired during natural transformation (random transposon-tagged DNA was readily taken up in chitin transformation assays) exists, the phenomenon of chitin-induced transformation likely plays an important but general role in the evolution of this genetically promiscuous genus.