USA300, a clone of meticillin-resistant Staphylococcus aureus, is a major source of community-acquired infections in the USA, Canada, and Europe. Our aim was to sequence its genome and compare it with those of other strains of S aureus to try to identify genes responsible for its distinctive epidemiological and virulence properties. We ascertained the genome sequence of FPR3757, a multidrug resistant USA300 strain, by random shotgun sequencing, then compared it with the sequences of ten other staphylococcal strains. Compared with closely related S aureus, we noted that almost all of the unique genes in USA300 clustered in novel allotypes of mobile genetic elements. Some of the unique genes are involved in pathogenesis, including Panton-Valentine leucocidin and molecular variants of enterotoxin Q and K. The most striking feature of the USA300 genome is the horizontal acquisition of a novel mobile genetic element that encodes an arginine deiminase pathway and an oligopeptide permease system that could contribute to growth and survival of USA300. We did not detect this element, termed arginine catabolic mobile element (ACME), in other S aureus strains. We noted a high prevalence of ACME in S epidermidis, suggesting not only that ACME transfers into USA300 from S epidermidis, but also that this element confers a selective advantage to this ubiquitous commensal of the human skin. USA300 has acquired mobile genetic elements that encode resistance and virulence determinants that could enhance fitness and pathogenicity.