Insects are known to host a wide variety of beneficial microbes that are fundamental to many aspects of their biology and have substantially shaped their evolution. Notably, parasitoid wasps have repeatedly evolved beneficial associations with viruses that enable developing wasps to survive as parasites that feed from other insects. Ongoing genomic sequencing efforts have revealed that most of these virus-derived entities are fully integrated into the genomes of parasitoid wasp lineages, representing endogenous viral elements (EVEs) that retain the ability to produce virus or virus-like particles within wasp reproductive tissues. All documented parasitoid EVEs have undergone similar genomic rearrangements compared to their viral ancestors characterized by viral genes scattered across wasp genomes and specific viral gene losses. The recurrent presence of viral endogenization and genomic reorganization in beneficial virus systems identified to date suggest that these features are crucial to forming heritable alliances between parasitoid wasps and viruses. Here, our genomic characterization of a mutualistic poxvirus associated with the wasp Diachasmimorpha longicaudata, known as Diachasmimorpha longicaudata entomopoxvirus (DlEPV), has uncovered the first instance of beneficial virus evolution that does not conform to the genomic architecture shared by parasitoid EVEs with which it displays evolutionary convergence. Rather, DlEPV retains the exogenous viral genome of its poxvirus ancestor and the majority of conserved poxvirus core genes. Additional comparative analyses indicate that DlEPV is related to a fly pathogen and contains a novel gene expansion that may be adaptive to its symbiotic role. Finally, differential expression analysis during virus replication in wasps and fly hosts demonstrates a unique mechanism of functional partitioning that allows DlEPV to persist within and provide benefit to its parasitoid wasp host.