Cooperation depends upon high relatedness, the high genetic similarity of interacting partners relative to the wider population. For pathogenic bacteria, which show diverse cooperative traits, the population processes that determine relatedness are poorly understood. Here, we explore whether within host dynamics can produce high relatedness in the insect pathogen Bacillus thuringiensis. We study the effects of host/pathogen interactions on relatedness via a model of host invasion and fit parameters to competition experiments with marked strains. We show that invasibility is a key parameter for determining relatedness and experimentally demonstrate the emergence of high relatedness from well-mixed inocula. We find that a single infection cycle results in a bottleneck with a similar level of relatedness to those previously reported in the field. The bottlenecks that are a product of widespread barriers to infection can therefore produce the population structure required for the evolution of cooperative virulence.