Natural modification of the colony appearance is a phenomenon that has not been fully understood in mycobacteria. Here, we show that Mycobacterium smegmatis ATCC607 displays a low-frequency spontaneous morphological variation that correlates with the acquisition of a panel of new phenotypes, such as aggregation, biofilm formation and sliding motility. These variants produce larger amounts of glycopeptidolipid (GPL), a cell-surface component, than did the wild-type strain. This conversion results from the transposition of two types of insertion sequences, IS1096 and ISMsm3, into two loci. One locus is the promoter region of the mps operon, the GPL biosynthesis gene cluster, leading to the overexpression of these genes. The other locus is the lsr2 gene, which encodes a small basic histone-like protein that likely plays a regulatory role at the mps promoter and also controls pigment production. This study demonstrates that insertion sequence mobility play a crucial role in the acquisition of new phenotypes.