Comparative genomic analysis of the tailed bacteriophages shows that they are genetically mosaic with respect to each other, implying that horizontal exchange of sequences is an important component of their evolution. Horizontal exchange occurs intensively among closely related phages but also at reduced frequency across the entire population of tailed phages. It results in exchange of homologous functions, exchange of analogous but non-homologous functions as with the prophage integrases, and introduction of novel functions into the genome as with the morons. Extrapolation of these processes back in evolutionary time leads to a speculative model for the origins and early evolution of phages.