The human zoonotic pathogen Escherichia coli O157:H7 is defined by its extensive prophage repertoire including those that encode Shiga toxin, the factor responsible for inducing life-threatening pathology in humans. As well as introducing genes that can contribute to the virulence of a strain, prophage can enable the generation of large-chromosomal rearrangements (LCRs) by homologous recombination. This work examines the types and frequencies of LCRs across the major lineages of the O157:H7 serotype. We demonstrate that LCRs are a major source of genomic variation across all lineages of E. coli O157:H7 and by using both optical mapping and Oxford Nanopore long-read sequencing prove that LCRs are generated in laboratory cultures started from a single colony and that these variants can be recovered from colonized cattle. LCRs are biased towards the terminus region of the genome and are bounded by specific prophages that share large regions of sequence homology associated with the recombinational activity. RNA transcriptional profiling and phenotyping of specific structural variants indicated that important virulence phenotypes such as Shiga-toxin production, type-3 secretion and motility can be affected by LCRs. In summary, E. coli O157:H7 has acquired multiple prophage regions over time that act to continually produce structural variants of the genome. These findings raise important questions about the significance of this prophage-mediated genome contingency to enhance adaptability between environments.