Klebsiella pneumoniae clonal complex (CC) 258/11, comprising sequence types (STs) 258, 11 and closely related STs, is associated with dissemination of the K. pneumoniae carbapenemase (KPC). Hospital outbreaks of KPC CC258/11 infections have been observed globally and are very difficult to treat. As a consequence there is renewed interest in alternative infection control measures such as vaccines and phage or depolymerase treatments targeting the K pneumoniae polysaccharide capsule. To date, 78 immunologically distinct capsule variants have been described in K. pneumoniae. Previous investigations of ST258 and a small number of closely related strains suggested capsular variation was limited within this clone; only two distinct ST258 capsular synthesis (cps) loci have been identified, both acquired through large-scale recombination events (>50 kbp). Here we report comparative genomic analysis of the broader K. pneumoniae CC258/11. Our data indicate that several large-scale recombination events have shaped the genomes of CC258/11, and that definition of the complex should be broadened to include ST395 (also reported to harbour KPC). We identified 11 different cps loci within CC258/11, suggesting that capsular switching is actually common within the complex. We also observed several insertion sequences (IS) within the cps loci, and show further diversification of two loci through IS activity. These findings suggest the capsular loci of clinically important K. pneumoniae are under diversifying selection, which alters our understanding of the evolution of this important clone and has implications for the design of control measures targeting the capsule.