We recently reported a dramatic increase in the prevalence of carbapenem-resistant Acinetobacter baumannii infections in the intensive care unit (ICU) of a Vietnamese hospital. This upsurge was associated with a specific oxa23-positive clone that was identified by multilocus VNTR analysis. Here, we used whole-genome sequence analysis to dissect the emergence of carbapenem-resistant A. baumannii causing ventilator-associated pneumonia (VAP) in the ICU during 2009-2012. To provide historical context and distinguish microevolution from strain introduction, we compared these genomes with those of A. baumannii asymptomatic carriage and VAP isolates from this same ICU collected during 2003-2007. We identified diverse lineages co-circulating over many years. Carbapenem resistance was associated with the presence of oxa23, oxa40, oxa58 and ndm1 genes in multiple lineages. The majority of resistant isolates were oxa23-positive global clone GC2; fine-scale phylogenomic analysis revealed five distinct GC2 sublineages within the ICU that had evolved locally via independent chromosomal insertions of oxa23 transposons. The increase in infections caused by carbapenem-resistant A. baumannii was associated with transposon-mediated transmission of a carbapenemase gene, rather than clonal expansion or spread of a carbapenemase-harbouring plasmid. Additionally, we found evidence of homologous recombination creating diversity within the local GC2 population, including several events resulting in replacement of the capsule locus. We identified likely donors of the imported capsule locus sequences amongst the A. baumannii isolated on the same ward, suggesting that diversification was largely facilitated via reassortment and sharing of genetic material within the localized A. baumannii population.