Localized genomic variability is crucial for the ongoing conflicts between infectious microbes and their hosts. An understanding of evolutionary and adaptive patterns associated with genomic variability will help guide development of vaccines and antimicrobial agents. While most analyses of the human microbiome have focused on taxonomic classification and gene annotation, we investigated genomic variation of skin-associated viral communities. We evaluated patterns of viral genomic variation across 16 healthy human volunteers. Human papillomavirus (HPV) and phages contained 106 and 465 regions of diversification, or hypervariable loci, respectively. phage genomes were minimally divergent and contained no hypervariable loci. Genes containing hypervariable loci were involved in functions including host tropism and immune evasion. HPV and phage hypervariable loci were associated with purifying selection. Amino acid substitution patterns were virus dependent, as were predictions of their phenotypic effects. We identified diversity generating retroelements as one likely mechanism driving hypervariability. We validated these findings in an independently collected skin metagenomic sequence dataset, suggesting that these features of skin virome genomic variability are widespread. Our results highlight the genomic variation landscape of the skin virome and provide a foundation for better understanding community viral evolution and the functional implications of genomic diversification of skin viruses.