Diversity of the polysaccharide capsule in Streptococcus pneumoniae -- main surface antigen and the target of the currently used pneumococcal vaccines -- constitutes a major obstacle in eliminating pneumococcal disease. Such diversity is genetically encoded by almost 100 variants of the capsule biosynthesis locus, cps. However, the evolutionary dynamics of the capsule remains not fully understood. Here, using genetic data from 4,519 bacterial isolates, we found cps to be an evolutionary hotspot with elevated substitution and recombination rates. These rates were a consequence of relaxed purifying selection and positive, diversifying selection acting at this locus, supporting the hypothesis that the capsule has an increased potential to generate novel diversity compared to the rest of the genome. Diversifying selection was particularly evident in the region of wzd/wze genes, which are known to regulate capsule expression and hence the bacterium's ability to cause disease. Using a novel, capsule-centred approach, we analysed the evolutionary history of twelve major serogroups. Such analysis revealed their complex diversification scenarios, which were principally driven by recombination with other serogroups and other streptococci. Patterns of recombinational exchanges between serogroups could not be explained by serotype frequency alone, thus pointing to non-random associations between co-colonising serotypes. Finally, we discovered a previously unobserved mosaic serotype 39X, which was confirmed to carry a viable and structurally novel capsule. Adding to previous discoveries of other mosaic capsules in densely sampled collections, these results emphasise the strong adaptive potential of the bacterium by its ability to generate novel antigenic diversity by recombination.