Staphylococcus aureus mastitis in dairy sheep ranges from subclinical mastitis to lethal gangrenous mastitis. Neither the S. aureus virulence factors nor the host-factors or the epidemiological events contributing to the different outcomes are known. In a field study in a dairy sheep farm over 21 months, sixteen natural isolates of S. aureus were collected from six subclinical mastitis cases, one lethal gangrenous mastitis case, nasal carriage from eight ewes, and one isolate from ambient air in the milking room. A genomic comparison of two strains, one responsible for subclinical mastitis and one for lethal gangrenous mastitis, was performed using multi-strain DNA microarrays. Multiple typing techniques (pulsed-field-gel-electrophoresis, multiple-locus variable-number, single-nucleotide polymorphisms, randomly amplified polymorphic DNA, spa typing and sas typing) were used to characterise the remaining isolates and to follow the persistence of the gangrenous isolate in ewes nares. Our results showed that the two strains were genetically closely related and they shared 3 615 identical predicted open reading frames (ORF). However, the gangrenous mastitis isolate carried variant versions of several genes (sdrD, clfA-B, sasA, sasB, sasD, sasI, and splE) and was missing fnbB and a prophage. The typing results showed that this gangrenous strain emerged after the initial subclinical mastitis screening, but then persisted in the flock in the nares of four ewes. Although we cannot dismiss the role of host susceptibility in the clinical events in this flock, our data support the hypothesis that S. aureus populations had evolved in the sheep flock and that S. aureus genetic variations could have contributed to enhanced virulence.