Highly pathogenic avian influenza (HPAI) virus of the H5N1 subtype was first diagnosed in poultry in Egypt in 2006, and since then the disease became enzootic in poultry throughout the country, affecting the poultry industry and village poultry as well as infecting humans. Vaccination has been used as a part of the control strategy to help to control the disease. Epidemiological data with sequence analysis of H5N1 viruses is important to link the mechanism of virus evolution in Egypt. This study describes the evolutionary pattern of Egyptian H5N1 viruses based on molecular characterization for the isolates collected from commercial poultry farms and village poultry from 2006 to 2011. Genetic analysis of the hemagglutinin (HA) gene was done by sequencing of the full-length H5 gene. The epidemiological pattern of disease outbreaks in Egyptian poultry farms seems to be seasonal with no specific geographic distribution across the country. The molecular epidemiological data revealed that there are two major groups of viruses: the classic group of subclade 2.2.1 and a variant group of 2.2.1.1. The classic group is prevailing mainly in village poultry and had fewer mutations compared to the originally introduced virus in 2006. Since 2009, this group has started to be transmitted back to commercial sectors. The variant group emerged by late 2007, was prevalent mainly in vaccinated commercial poultry, mutated continuously at a higher rate until 2010, and started to decline in 2011. Genetic analysis of the neuraminidase (NA) gene and the other six internal genes indicates a grouping of the Egyptian viruses similar to that obtained using the HA gene, with no obvious reassortments. The results of this study indicate that HPAI-H5N1 viruses are progressively evolving and adapting in Egypt and continue to acquire new mutations every season.