Influenza B virus undergoes seasonal antigenic drift more slowly than influenza A, but the reasons for this difference are unclear. While the evolutionary dynamics of influenza viruses play out globally, they are fundamentally driven by mutation, reassortment, drift, and selection at the level of individual hosts. These processes have recently been described for influenza A virus, but little is known about the evolutionary dynamics of influenza B virus (IBV) during individual infections and transmission events. Here we define the within-host evolutionary dynamics of influenza B virus by sequencing virus populations from naturally-infected individuals enrolled in a prospective, community-based cohort over 8176 person-seasons of observation. Through analysis of high depth-of-coverage sequencing data from samples from 91 individuals with influenza B, we find that influenza B virus accumulates lower genetic diversity than previously observed for influenza A virus during acute infections. Consistent with studies of influenza A viruses, the within-host evolution of influenza B viruses is characterized by purifying selection and the general absence of widespread positive selection of within-host variants. Analysis of shared genetic diversity across 15 sequence-validated transmission pairs suggests that IBV experiences a tight transmission bottleneck similar to that of influenza A virus. These patterns of local-scale evolution are consistent with influenza B virus´ slower global evolutionary rate.Importance The evolution of influenza virus is a significant public health problem and necessitates the annual evaluation of influenza vaccine formulation to keep pace with viral escape from herd immunity. Influenza B virus is a serious health concern for children, in particular, yet remains understudied compared to influenza A virus. Influenza B virus evolves more slowly than influenza A, but the factors underlying this are not completely understood. We studied how the within-host diversity of influenza B virus relates to its global evolution by sequencing viruses from a community-based cohort. We found that influenza B virus populations have lower within-host genetic diversity than influenza A virus and experience a tight genetic bottleneck during transmission. Our work provides insights into the varying dynamics of influenza viruses in human infection.