Influenza A (H7N9) virus has been causing human infections in China since February 2013, raising serious concerns of potential pandemics. Previous studies demonstrate that human infection is directly linked to live animal markets, and that the internal genes of the virus are derived from H9N2 viruses circulating in the Yangtze River Delta area in Eastern China. Here following analysis of 109 viruses, we show a much higher genetic heterogeneity of the H7N9 viruses than previously reported, with a total of 27 newly designated genotypes. Phylogenetic and genealogical inferences reveal that genotypes G0 and G2.6 dominantly co-circulate within poultry, with most human isolates belonging to the genotype G0. G0 viruses are also responsible for the inter- and intra-province transmissions, leading to the genesis of novel genotypes. These observations suggest the province-specific H9N2 virus gene pools increase the genetic diversity of H7N9 via dynamic reassortments and also imply that G0 has not gained overwhelming fitness and the virus continues to undergo reassortment.