The H2N2 avian influenza viruses (AIV) have been reported in the Northeast United States of America (USA) live bird market (LBM) system since 2014. In this study, we investigated the genetic evolution and characterized molecular markers of the recent H2N2 AIVs in LBMs in the Northeast USA. Phylogenetic analyses revealed that the LBM H2N2 lineage has evolved into three distinct subgroups (groups A.1, A.2, and A.3). The group A.1 viruses and some transient reassortants evolved through several independent reassortment events between the LBM H2N2 lineage and North American wild bird-origin AIVs. Separately, a group of phylogenetically distinct novel H2N2 viruses (group B) identified in LBMs completely originated from wild birds, independent from the previous LBM H2N2 lineage that has persisted since 2014. While no molecular evidence of mammalian adaptation was found, the novel H2N2 viruses in the LBM system underscore the importance of updated risk assessments for potential human transmission.