The O-specific antigen (OSA) in Pseudomonas aeruginosa lipopolysaccharide is highly varied by sugar identity, side chains, and bond between O-repeats. These differences classified P. aeruginosa into 20 distinct serotypes. In the past few decades, O12 has emerged as the predominant serotype in clinical settings and outbreaks. These serotype O12 isolates exhibit high levels of resistance to various classes of antibiotics. Here, we explore how the P. aeruginosa OSA biosynthesis gene clusters evolve in the population by investigating the association between the phylogenetic relationships among 83 P. aeruginosa strains and their serotypes. While most serotypes were closely linked to the core genome phylogeny, we observed horizontal exchange of OSA biosynthesis genes among phylogenetically distinct P. aeruginosa strains. Specifically, we identified a "serotype island" ranging from 62 kb to 185 kb containing the P. aeruginosa O12 OSA gene cluster, an antibiotic resistance determinant (gyrAC248T), and other genes that have been transferred between P. aeruginosa strains with distinct core genome architectures. We showed that these genes were likely acquired from an O12 serotype strain that is closely related to P. aeruginosa PA7. Acquisition and recombination of the "serotype island" resulted in displacement of the native OSA gene cluster and expression of the O12 serotype in the recipients. Serotype switching by recombination has apparently occurred multiple times involving bacteria of various genomic backgrounds. In conclusion, serotype switching in combination with acquisition of an antibiotic resistance determinant most likely contributed to the dissemination of the O12 serotype in clinical settings. Infection rates in hospital settings by multidrug-resistant (MDR) Pseudomonas aeruginosa clones have increased during the past decades, and serotype O12 is predominant among these epidemic strains. It is not known why the MDR phenotype is associated with serotype O12 and how this clone type has emerged. This study shows that evolution of MDR O12 strains involved a switch from an ancestral O4 serotype to O12. Serotype switching was the result of horizontal transfer and genetic recombination of lipopolysaccharide (LPS) biosynthesis genes originating from an MDR taxonomic outlier P. aeruginosa strain. Moreover, the recombination event also resulted in acquisition of antibiotic resistance genes. These results impact on our understanding of MDR outbreak strain and serotype evolution and can potentially assist in better monitoring and prevention.