Myxomatosis is a rapidly lethal disease of European rabbits that is caused by myxoma virus (MYXV). The introduction of a South American strain of MYXV into the European rabbit population of Australia is the classic case of host-pathogen coevolution following cross-species transmission. The most virulent strains of MYXV for European rabbits are the Californian viruses, found in the Pacific states of the United States and the Baja Peninsula, Mexico. The natural host of Californian MYXV is the brush rabbit, Sylvilagus bachmani. We determined the complete sequence of the MSW strain of Californian MYXV and performed a comparative analysis with other MYXV genomes. The MSW genome is larger than that of the South American Lausanne (type) strain of MYXV due to an expansion of the terminal inverted repeats (TIRs) of the genome, with duplication of the M156R, M154L, M153R, M152R, and M151R genes and part of the M150R gene from the right-hand (RH) end of the genome at the left-hand (LH) TIR. Despite the extreme virulence of MSW, no novel genes were identified; five genes were disrupted by multiple indels or mutations to the ATG start codon, including two genes, M008.1L/R and M152R, with major virulence functions in European rabbits, and a sixth gene, M000.5L/R, was absent. The loss of these gene functions suggests that S. bachmani is a relatively recent host for MYXV and that duplication of virulence genes in the TIRs, gene loss, or sequence variation in other genes can compensate for the loss of M008.1L/R and M152R in infections of European rabbits.