A novel H7N9 avian influenza virus has caused five human epidemics in China since 2013. The substantial increase in prevalence and the emergence of antigenically divergent or highly pathogenic (HP) H7N9 strains during the current outbreak raises concerns about the epizootic-potential of these viruses. Here, we investigate the evolution and adaptation of H7N9 by combining publicly available data with newly generated virus sequences isolated in Guangdong between 2015-2017. Phylogenetic analyses show that currently-circulating H7N9 viruses belong to distinct lineages with differing spatial distributions. Using ancestral sequence reconstruction and structural modelling we have identified parallel amino-acid changes on multiple separate lineages. Furthermore, we infer mutations in HA primarily occur at sites involved in receptor-recognition and/or antigenicity. We also identify seven new HP strains, which likely emerged from viruses circulating in eastern Guangdong around March 2016 and is further associated with a high rate of adaptive molecular evolution.