Bacterial infections causing mastitis in sheep can result in severe economic losses for farmers. A large survey of milk samples from ewes with mastitis in Sardinia, Italy, indicated an increasing prevalence of Pseudomonas aeruginosa infections. It has been shown previously that during chronic, biofilm-associated infections P. aeruginosa populations diversify. We report the phenotypic and genomic characterisation of two clonal P. aeruginosa isolates (PSE305 and PSE306) from a mastitis infection outbreak, representing distinct colony morphology variants. In addition to pigment production, PSE305 and PSE306 differed in phenotypic characteristics including biofilm formation, utilisation of various carbon and nitrogen sources, twitching motility. We found higher levels of expression of genes associated with biofilm formation (pelB) and twitching motility (flgD) in PSE305, compared to the biofilm and twitching-defective PSE306. Comparative genomics analysis revealed single nucleotide polymorphisms (SNPs) and minor insertion/deletion variations between PSE305 and PSE306, including a SNP mutation in the pilP gene of PSE306. By introducing a wild-type pilP gene we were able to partially complement the defective twitching motility of PSE306. There were also three larger regions of difference between the two genomes, indicating genomic instability. Hence, we have demonstrated that P. aeruginosa population divergence can occur during an outbreak of mastitis, leading to significant variations in phenotype and genotype, and resembling the behaviour of P. aeruginosa during chronic biofilm-associated infections.