Many bacterial pathogens employ a type III secretion system to deliver type III secreted effectors (T3SEs) into host cells, where they interact directly with host substrates to modulate defense pathways and promote disease. This interaction creates intense selective pressures on these secreted effectors, necessitating rapid evolution to overcome host surveillance systems and defenses. Using computational and evolutionary approaches, we have identified numerous mosaic and truncated T3SEs among animal and plant pathogens. We propose that these secreted virulence genes have evolved through a shuffling process we have called "terminal reassortment." In terminal reassortment, existing T3SE termini are mobilized within the genome, creating random genetic fusions that result in chimeric genes. Up to 32% of T3SE families in species with relatively large and well-characterized T3SE repertoires show evidence of terminal reassortment, as compared to only 7% of non-T3SE families. Terminal reassortment may permit the near instantaneous evolution of new T3SEs and appears responsible for major modifications to effector activity and function. Because this process plays a more significant role in the evolution of T3SEs than non-effectors, it provides insight into the evolutionary origins of T3SEs and may also help explain the rapid emergence of new infectious agents.