Abstract Background A novel human parechovirus 3 Australian recombinant (HPeV3-AR) strain emerged in 2013 and coincided with biennial outbreaks of sepsis-like illnesses in infants. We evaluated the molecular evolution of the HPeV3-AR strain and its association with severe HPeV infections. Methods HPeV3-positive samples collected from hospitalized infants aged 5–252 days in 2 Australian states (2013–2020) and from a community-based birth cohort (2010–2014) were sequenced. Coding regions were used to conduct phylogenetic and evolutionary analyses. A recombinant-specific polymerase chain reaction was designed and utilized to screen all clinical and community HPeV3-positive samples. Results Complete coding regions of 54 cases were obtained, which showed the HPeV3-AR strain progressively evolving, particularly in the 3′ end of the nonstructural genes. The HPeV3-AR strain was not detected in the community birth cohort until the initial outbreak in late 2013. High-throughput screening showed that most (>75%) hospitalized HPeV3 cases involved the AR strain in the first 3 clinical outbreaks, with declining prevalence in the 2019–2020 season. The AR strain was not statistically associated with increased clinical severity among hospitalized infants. Conclusions HPeV3-AR was the dominant strain during the study period. Increased hospital admissions may have been from a temporary fitness advantage and/or increased virulence. The continent-wide emergence, dominance, and decline of a human parechovirus 3 recombinant strain (HPeV3-AR) in Australia mirrored a rise and fall in HPeV infant hospitalizations; however, HPeV3-AR did not correlate with increased disease severity in hospital or community cohorts.