Vibrio parahaemolyticus is the leading bacterial cause of gastroenteritis associated with seafood consumption worldwide. Not all members of the species are thought to be pathogenic, thus identification of virulent organisms is essential to protect public health and the seafood industry. Correlations of human disease and known genetic markers (e.g. thermostable direct hemolysin (TDH), TDH-related hemolysin (TRH)) appear complex. Some isolates recovered from patients lack these factors, while their presence has become increasingly noted in isolates recovered from the environment. Here, we used whole-genome sequencing in combination with mammalian and insect models of infection to assess the pathogenic potential of V. parahaemolyticus isolated from European Atlantic shellfish production areas. We found environmental V. parahaemolyticus isolates harboured multiple virulence-associated genes, including TDH and/or TRH. However, carriage of these factors did not necessarily reflect virulence in the mammalian intestine, as an isolate containing TDH and the genes coding for a type 3 secretion system (T3SS) 2α virulence determinant, appeared avirulent. Moreover, environmental V. parahaemolyticus lacking TDH or TRH could be assigned to groups causing low and high levels of mortality in insect larvae, with experiments using defined bacterial mutants showing that a functional T3SS1 contributed to larval death. When taken together, our findings highlight the genetic diversity of V. parahaemolyticus isolates found in the environment, their potential to cause disease and the need for a more systematic evaluation of virulence in diverse V. parahaemolyticus to allow better genetic markers.