The widespread dissemination of species of the lactic acid bacteria (LAB) group in different environments testifies to their extraordinary niche adaptability. Members of the LAB are present on grass and other plant material, in dairy products, on human skin, and in the gastrointestinal and reproductive tracts. The selective pressure imparted by these specific environments is a key driver in the genomic diversity observed between strains of the same species originating from different habitats. Strains which are exploited in the dairy industry for the production of fermented dairy products are often referred to as ‘domesticated’ strains. These strains, which initially may have inhabited a non-dairy niche, have become specialized for growth in the milk environment. In fact, comparative genome analysis of multiple LAB species and strains has revealed a central trend in LAB evolution: the loss of ancestral genes and metabolic simplification toward adaptation to nutritionally-rich environments. By contrast, ‘environmental’ strains, defined as those from plants, animals and raw milk, exhibit diverse metabolic capabilities and lifestyle characteristics when compared with their ‘domesticated’ counterparts. Owing to the limited number of established dairy strains used in the production of fermented foods today, there is an increasing demand for novel strains, with concerted efforts to mine the microbiota of natural environments for strains of technological interest. Numerous studies have focused on uncovering the genomic and metabolic potential of these organisms, facilitating comparative genome analysis of strains from different environments and providing insight into the natural diversity of the LAB, a group of organisms that is at the core of the dairy industry. The natural biodiversity which exists in these environments may be exploited in dairy fermentations to expand flavor profiles, to produce natural ‘clean label’ ingredients or to develop safer products.