Klebsiella pneumoniae sequence type (ST) 17 is a global problem clone that causes multidrug-resistant (MDR) hospital infections worldwide. In 2008-2009, an outbreak of MDR ST17 occurred at a neonatal intensive care unit (NICU) in Stavanger, Norway. Fifty-seven children were colonized. We observed intestinal persistence of ST17 in all of the children for up to two years after hospital discharge. Here, we investigated the within-host evolution of ST17 in 45 of those children during long-term colonization and compared the outbreak with 254 global strains. Ninety-two outbreak-related isolates were whole-genome sequenced. They had capsule locus KL25, O locus O5 and carried yersiniabactin. During within-host colonization ST17 remained stable with few single nucleotide polymorphisms, no acquisition of antimicrobial resistance (AMR) or virulence determinants, and persistent carriage of a bla CTX-M-15-encoding IncFII(K) IncFIB(K) plasmid (pKp2177_1). The global collection included ST17 from 1993 to 2020 from 34 countries, that were from human infection (41.3%), colonization (39.3%) and respiratory specimens (7.3%), from animals (9.3%), and from the environment (2.7%). We estimate that ST17 emerged mid-to-late 19th century (1859, 95 % HPD 1763-1939) and diversified through recombinations of the K and O loci to form several sublineages, with various AMR genes, virulence loci and plasmids. There was limited evidence of persistence of AMR genes in any of these lineages. A globally disseminated sublineage with KL25/O5 accounted for 52.7 % of the genomes. It included a monophyletic subclade that emerged in the mid-1980s, which comprised the Stavanger NICU outbreak and 10 genomes from three other countries, which all carried pKp2177_1. The plasmid was also observed in a KL155/OL101 subclade from the 2000s. Three clonal expansions of ST17 were identified; all were healthcare-associated and carried either yersiniabactin and/or pKp2177_1. To conclude, ST17 is globally disseminated and associated with opportunistic hospital-acquired infections. It contributes to the burden of global MDR infections, but many diverse lineages persist without acquired AMR. We hypothesize that non-human sources and human colonization may play a crucial role for severe infections in vulnerable patients, such as preterm neonates.