The nucleotide and deduced amino acid sequences of louping ill (LI) virus isolates, collected from representative regions of the British Isles and Norway, were determined for either the entire envelope gene (20 isolates) or for a portion of the envelope gene that spans a hypervariable region and includes an LI virus specific marker sequence (53 isolates). Phylogenetic analysis reveals the presence of three major geographical populations of LI virus in the British Isles, viz. Irish, Welsh and British LI viruses, which all cause encephalomyelitis in animals, predominantly sheep, and co-habit the same tick population. British LI virus occurs throughout Scotland, England, Ireland and Norway. Irish and Welsh LI viruses occur only in Ireland and Wales, respectively. Phylogenetic analysis also predicts that LI virus initially emerged in Ireland and that a descendant was introduced into Great Britain via Wales and was subsequently transported to the borders of Scotland, from where it was dispersed throughout Scotland, northern England and Norway. More recently, the British LI virus was reintroduced into Ireland and also into south-west England. Dates of lineage divergence, calculated from the synonymous substitution rate, indicate that LI virus emerged in the British Isles less than 800 years ago and most LI virus dispersal occurred during the last 300 years. By combining these data with historical records it appears that livestock movement can be implicated in the dispersal of LI virus.