Polydnaviruses, double-stranded DNA viruses with segmented genomes, have evolved as obligate endosymbionts of parasitoid wasps. Virus particles are replication deficient and produced by female wasps from proviral sequences integrated into the wasp genome. These particles are co-injected with eggs into caterpillar hosts, where viral gene expression facilitates parasitoid survival and, thereby, survival of proviral DNA. Here we characterize and compare the encapsidated viral genome sequences of bracoviruses in the family Polydnaviridae associated with Glyptapanteles gypsy moth parasitoids, along with near complete proviral sequences from which both viral genomes are derived. The encapsidated Glyptapanteles indiensis and Glyptapanteles flavicoxis bracoviral genomes, each composed of 29 different size segments, total approximately 517 and 594 kbp, respectively. They are generated from a minimum of seven distinct loci in the wasp genome. Annotation of these sequences revealed numerous novel features for polydnaviruses, including insect-like sugar transporter genes and transposable elements. Evolutionary analyses suggest that positive selection is widespread among bracoviral genes. The structure and organization of G. indiensis and G. flavicoxis bracovirus proviral segments as multiple loci containing one to many viral segments, flanked and separated by wasp gene-encoding DNA, is confirmed. Rapid evolution of bracovirus genes supports the hypothesis of bracovirus genes in an 'arms race' between bracovirus and caterpillar. Phylogenetic analyses of the bracoviral genes encoding sugar transporters provides the first robust evidence of a wasp origin for some polydnavirus genes. We hypothesize transposable elements, such as those described here, could facilitate transfer of genes between proviral segments and host DNA.