The family Polydnaviridae is of interest because it provides the best example of viruses that have evolved a mutualistic association with their animal hosts. Polydnaviruses in the genus Bracovirus are strictly associated with parasitoid wasps in the family Braconidae, and evolved ∼100 million years ago from a nudivirus. Each wasp species relies on its associated bracovirus to parasitize hosts, while each bracovirus relies on its wasp for vertical transmission. Prior studies establish that bracovirus genomes consist of proviral segments and nudivirus-like replication genes, but how these components are organized in the genomes of wasps is unknown. Here, we sequenced the genome of the wasp Microplitis demolitor to characterize the proviral genome of M. demolitor bracovirus (MdBV). Unlike nudiviruses, bracoviruses produce virions that package multiple circular, double-stranded DNAs. DNA segments packaged into MdBV virions resided in eight dispersed loci in the M. demolitor genome. Each proviral segment was bounded by homologous motifs that guide processing to form mature viral DNAs. Rapid evolution of proviral segments obscured homology between other bracovirus-carrying wasps and MdBV. However, some domains flanking MdBV proviral loci were shared with other species. All MdBV genes previously identified to encode proteins required for replication were identified. Some of these genes resided in a multigene cluster but others, including subunits of the RNA polymerase that transcribes structural genes and integrases that process proviral segments, were widely dispersed in the M. demolitor genome. Overall, our results indicate that genome dispersal is a key feature in the evolution of bracoviruses into mutualists.