Bovine viral diarrhea virus (BVDV), a Pestivirus in the family Flaviviridae, is an economically important pathogen of cattle worldwide. The primary propagators of the virus are immunotolerant persistently infected (PI) cattle, which shed large quantities of virus throughout life. Despite the absence of an acquired immunity against BVDV in these PI cattle there are strong indications of viral variability that are of clinical and epidemiological importance. In this study the variability of E2 and NS5B sequences in multiple body compartments of PI cattle were characterized using clonal sequencing. Phylogenetic analyses revealed that BVDV exists as a quasispecies within PI cattle. Viral variants were clustered by tissue compartment significantly more often than expected by chance alone with the central nervous system appearing to be a particularly important viral reservoir. We also found strong indications for a genetic bottleneck during vertical transmission from PI animals to their offspring. These quasispecies analyses within PI cattle exemplify the role of the PI host in viral propagation and highlight the complex dynamics of BVDV pathogenesis, transmission and evolution.