Over the last 60 years, the use of hexachlorocyclohexane (HCH) as a pesticide has resulted in the production of >4 million tons of HCH waste, which has been dumped in open sinks across the globe. Here, the combination of the genomes of two genetic subspecies (Sphingobium japonicum UT26 and Sphingobium indicum B90A; isolated from two discrete geographical locations, Japan and India, respectively) capable of degrading HCH, with metagenomic data from an HCH dumpsite (∼450 mg HCH per g soil), enabled the reconstruction and validation of the last-common ancestor (LCA) genotype. Mapping the LCA genotype (3128 genes) to the subspecies genomes demonstrated that >20% of the genes in each subspecies were absent in the LCA. This includes two enzymes from the 'upper' HCH degradation pathway, suggesting that the ancestor was unable to degrade HCH isomers, but descendants acquired lin genes by transposon-mediated lateral gene transfer. In addition, anthranilate and homogentisate degradation traits were found to be strain (selectively retained only by UT26) and environment (absent in the LCA and subspecies, but prevalent in the metagenome) specific, respectively. One draft secondary chromosome, two near complete plasmids and eight complete lin transposons were assembled from the metagenomic DNA. Collectively, these results reinforce the elastic nature of the genus Sphingobium, and describe the evolutionary acquisition mechanism of a xenobiotic degradation phenotype in response to environmental pollution. This also demonstrates for the first time the use of metagenomic data in ancestral genotype reconstruction, highlighting its potential to provide significant insight into the development of such phenotypes.