The lysogenic bacteriophage APSE infects 'Candidatus Hamiltonella defensa,' a facultative endosymbiont of aphids and other sap-feeding insects. This endosymbiont has established a beneficial association with aphids, increasing survivorship following attack by parasitoid wasps. Although APSE and 'Ca. Hamiltonella defensa' are effectively maternally transmitted between aphid generations, they can also be horizontally transferred among insect hosts, which results in genetically distinct 'Ca. Hamiltonella defensa' strains infecting the same aphid species and sporadic distributions of both APSE and 'Ca. Hamiltonella defensa' among hosts. Aphids infected only with 'Ca. Hamiltonella defensa' have significantly less protection than those infected with both 'Ca. Hamiltonella defensa' and APSE. This protection has been proposed to be connected to eukaryote-targeted toxins previously discovered in the genomes of two characterized APSE strains. In this study, we have sequenced partial genomes from seven additional APSE strains to address the evolution and extent of toxin variation in this phage. The APSE lysis region has been a hot spot for nonhomologous recombination of novel virulence cassettes. We identified four new toxins from three protein families, Shiga-like toxin, cytolethal distending toxin, and YD-repeat toxins. These recombination events have also resulted in reassortment of the downstream lysozyme and holin genes. Analysis of the conserved APSE genes flanking the variable toxin cassettes reveals a close phylogenetic association with phage sequences from two other facultative endosymbionts of insects. Thus, phage may act as a conduit for ongoing gene exchange among heritable endosymbionts.