Listeria monocytogenes has been previously grouped into three evolutionary groups, termed lineages I, II and III. While lineages I and II are commonly isolated from various sources, lineage III isolates are rare and have several atypical and unique phenotypic characteristics. Relative to their prevalence in other sources, lineage III strains are overrepresented among isolates from food-production animals, and underrepresented among isolates from human clinical cases and foods. This work describes an extensive genotypic and phenotypic characterization of 46 lineage III isolates. Phylogenetic analyses of partial sigB and actA sequences showed that lineage III represents three distinct subgroups, which were termed IIIA, IIIB and IIIC. Each of these lineage III subgroups is characterized by differentiating genotypic and phenotypic characteristics. Unlike typical L. monocytogenes, all subgroup IIIB and IIIC isolates lack the ability to ferment rhamnose. While all IIIC and most IIIB isolates carry the putative virulence gene ImaA, the majority of subgroup IIIA isolates lack this gene. All three lineage III subgroups contain isolates from human clinical cases as well as isolates that are cytopathogenic in a cell culture plaque assay, indicating that lineage III isolates have the potential to cause human disease. The identification of specific genotypic and phenotypic characteristics among the three lineage III subgroups suggests that these subgroups may occupy different ecological niches and, therefore, may be transmitted by different pathways.