Diversity-generating retroelements (DGRs) are distinguished by their ability to iteratively diversify defined DNA sequences which encode the ligand binding domains of target proteins (TP). Diversification occurs through a template-dependent, error prone reverse-transcriptase mediated process, termed mutagenic homing, which introduces nucleotide substitutions into a variable repeat (VR) while preserving cis- and trans- acting elements needed for future rounds of diversification. The process of DNA diversification requires a DGR-encoded reverse transcriptase (RT), an accessory variability determinant (Avd), and a template repeat (TR)-derived RNA intermediate. The archetype DGR is found within the Bordetella bacteriophage BPP however, over 300 putative DGRs have been identified within the bacterial domain as well as within a species of archaea. We have identified DGRs within the opportunistic human pathogen Legionella pneumophila (Lp) as well as within Legionella tunisiensis which encode nearly identical diversification machinery, yet each has a VR with a unique pattern of adenine mutagenesis suggesting individualized diversification in response to selection. We analyzed the DGR within Lp strain Corby and identified that the genetic requirements for mutagenic homing were similar to those of BPP, suggesting all DGRs might function through a conserved mechanism. Using in vitro growth conditions, we observed elevated levels of diversification during Lp transition from exponential to stationary growth phase suggesting that DGR mutagenic homing might be modulated by host regulatory networks. To investigate this hypothesis we generated deletions of key factors, relA and spoT, which are critical for coordinating phenotypic differentiation of Lp. PCR analysis to detect levels of mutagenic homing in wt and mutant Lp cells revealed an increase in relA spoT double deletion mutants. qRT-PCR analysis of wt and mutant cells showed that double deletion mutants had an increase in TR-RNA transcripts, while expression of avd and RT was unchanged. Over-expression of TR-RNA increased levels of mutagenic homing above those observed in wt cells, but not to the extent observed with the overexpression of avd, TR, and RT. Cumulatively these data suggest that in Lp, the abundance of TR-RNA transcripts partially controls rates of mutagenic homing, indicating regulation of these elements on multiple levels. Lp DGRs have the potential to generate ~1019 distinct polypeptide sequences within C-type lectin (CLec) domains of their TPs. The Lp Corby TP, ldtA, expresses a surface displayed outer membrane (OM) lipoprotein whose CLec domain is exposed to the extra-cellular milieu. Translocation of LdtA across the inner membrane requires the twin-arginine translocation (TAT) machinery where we hypothesize it is recognized, modified, and transported to the outer membrane by the localization of lipoproteins (Lol) system. To fully understand the pathways required for surface display of a protein, we identified and analyzed the contribution of a non-canonical lipobox with conserved targeting residues at +2/+3 positions in LdtA. Mutagenesis of the lipobox conserved cysteine as well as replacement of targeting residues with amino acids shown to result in sorting by Lol to the OM all resulted in retention of LdtA in the inner membrane. Furthermore, cleavage of LdtA from pro- to mature-peptide was found to depend on the characteristic of the +2 residue suggesting that maturation and subsequent translocation of LdtA does not follow the established convention for lipoproteins. Furthermore, we demonstrated surface display of LdtA in several species of gram negative bacteria suggesting its localization requires conserved pathways common to bacteria. These results suggest that DGR TPs in Lp are diversified in response to the physiological state of the host and trafficked to the surface by an unusual Lol-related mechanism.