We have demonstrated for the first time a comprehensive evolutionary analysis of the Mexican lineage H5N2 avian influenza virus (AIV) using complete genome sequences (n = 189), from its first isolation in 1993 until 2019. Our study showed that the Mexican lineage H5N2 AIV originated from the North American wild bird gene pool viruses around 1990 and is currently circulating in poultry populations of Mexico, the Dominican Republic, and Taiwan. Since the implementation of vaccination in 1995, the highly pathogenic AIV (HPAIV) H5N2 virus was eradicated from Mexican poultry in mid-1995. However, the low pathogenic AIV (LPAIV) H5N2 virus has continued to circulate in domestic poultry populations in Mexico, eventually evolving into five distinct clades. In the current study, we demonstrate that the evolution of Mexican lineage H5N2 AIVs involves gene reassortments and mutations gained over time. The current circulating Mexican lineage H5N2 AIVs are classified as LPAIV based on the amino acid sequences of the hemagglutinin (HA) protein cleavage site motif as well as the results of the intravenous pathogenicity index (IVPI). The immune pressure from vaccinations most likely has played a significant role in the positive selection of antigenic drift mutants within the Mexican H5N2 AIVs. Most of the identified substitutions in these viruses are located on the critical antigenic residues of the HA protein and as a result, might have contributed to vaccine failures. This study highlights and stresses the need for vaccine updates while emphasizing the importance of continued molecular monitoring of the HA protein for its antigenic changes compared to the vaccines used.