Escherichia coli strains expressing the K1 capsule are a major cause of sepsis and meningitis in human neonates. The development of these diseases is dependent on the expression of a range of virulence factors, many of which remain uncharacterized. Here, we show that all but 1 of 34 E. coli K1 neonatal isolates carried clbA and clbP, genes contained within the pks pathogenicity island and required for the synthesis of colibactin, a polyketide-peptide genotoxin that causes genomic instability in eukaryotic cells by induction of double-strand breaks in DNA. Inactivation of clbA and clbP in E. coli A192PP, a virulent strain of serotype O18:K1 that colonizes the gastrointestinal tract and translocates to the blood compartment with very high frequency in experimental infection of the neonatal rat, significantly reduced the capacity of A192PP to colonize the gut, engender double-strand breaks in DNA, and cause invasive, lethal disease. Mutation of clbA, which encodes a pleiotropic enzyme also involved in siderophore synthesis, impacted virulence to a greater extent than mutation of clbP, encoding an enzyme specific to colibactin synthesis. Restoration of colibactin gene function by complementation reestablished the fully virulent phenotype. We conclude that colibactin contributes to the capacity of E. coli K1 to colonize the neonatal gastrointestinal tract and to cause invasive disease in the susceptible neonate.