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ABSTRACT Microbial symbionts provide benefits that contribute to the ecology and fitness of host plants and animals. Therefore, the evolutionary success of plants and animals fundamentally depends on long-term maintenance of beneficial associations. Most work investigating coevolution and symbiotic maintenance has focused on species-level associations, and studies are lacking that assess the impact of bacterial strain diversity on symbiotic associations within a coevolutionary framework. Here, we demonstrate that fitness in mutualism varies depending on bacterial strain identity, and this is consistent with variation shaping phylogenetic patterns and maintenance through fitness benefits. Through genome sequencing of nine bacterial symbiont strains and cophylogenetic analysis, we demonstrate diversity among Xenorhabdus bovienii bacteria. Further, we identified cocladogenesis between Steinernema feltiae nematode hosts and their corresponding X. bovienii symbiont strains, indicating potential specificity within the association. To test the specificity, we performed laboratory crosses of nematode hosts with native and nonnative symbiont strains, which revealed that combinations with the native bacterial symbiont and closely related strains performed significantly better than those with more divergent symbionts. Through genomic analyses we also defined potential factors contributing to specificity between nematode hosts and bacterial symbionts. These results suggest that strain-level diversity (e.g., subspecies-level differences) in microbial symbionts can drive variation in the success of host-microbe associations, and this suggests that these differences in symbiotic success could contribute to maintenance of the symbiosis over an evolutionary time scale. IMPORTANCE Beneficial symbioses between microbes and plant or animal hosts are ubiquitous, and in these associations, microbial symbionts provide key benefits to their hosts. As such, host success is fundamentally dependent on long-term maintenance of beneficial associations. Prolonged association between partners in evolutionary time is expected to result in interactions in which only specific partners can fully support symbiosis. The contribution of bacterial strain diversity on specificity and coevolution in a beneficial symbiosis remains unclear. In this study, we demonstrate that strain-level differences in fitness benefits occur in beneficial host-microbe interactions, and this variation likely shapes phylogenetic patterns and symbiotic maintenance. This highlights that symbiont contributions to host biology can vary significantly based on very-fine-scale differences among members of a microbial species. Further, this work emphasizes the need for greater phylogenetic resolution when considering the causes and consequences of host-microbe interactions.