Strangles, the most frequently diagnosed infectious disease of horses worldwide, is caused by Streptococcus equi. Despite its prevalence, the global diversity and mechanisms underlying the evolution of S. equi as a host-restricted pathogen remain poorly understood. Here, we define the global population structure of this important pathogen and reveal a population replacement in the late 19th or early 20th Century. Our data reveal a dynamic genome that continues to mutate and decay, but also to amplify and acquire genes despite the organism having lost its natural competence and become host-restricted. The lifestyle of S. equi within the horse is defined by short-term acute disease, strangles, followed by long-term infection. Population analysis reveals evidence of convergent evolution in isolates from post-acute disease samples as a result of niche adaptation to persistent infection within a host. Mutations that lead to metabolic streamlining and the loss of virulence determinants are more frequently found in persistent isolates, suggesting that the pathogenic potential of S. equi reduces as a consequence of long-term residency within the horse post-acute disease. An example of this is the deletion of the equibactin siderophore locus that is associated with iron acquisition, which occurs exclusively in persistent isolates, and renders S. equi significantly less able to cause acute disease in the natural host. We identify several loci that may similarly be required for the full virulence of S. equi, directing future research toward the development of new vaccines against this host-restricted pathogen.