Low-pathogenicity avian influenza (LPAI) viruses of subtypes H5 and H7 have the ability to spontaneously mutate to highly pathogenic (HPAI) virus variants, causing high mortality in poultry. The highly pathogenic phenotype is caused by mutation of the hemagglutinin (HA) cleavage site, but additional mutations may play a role. Evidence from the field for the switch to high pathogenicity remains scarce. This study provides direct evidence for LPAI-to-HPAI virus mutation during H7N3 infection of a turkey farm in the Netherlands. No severe clinical symptoms were reported at the farm, but deep sequencing of isolates from the infected turkeys revealed a minority of HPAI virus sequences (0.06%) in the virus population. The HPAI virus contained a 12-nucleotide insertion in the HA cleavage site that was likely introduced by a single event as no intermediates with shorter inserts were identified. This suggests nonhomologous recombination as the mechanism of insertion. Analysis of different organs of the infected turkeys showed the largest amount of HPAI virus in the lung (4.4%). The HPAI virus was rapidly selected in experimentally infected chickens after both intravenous and intranasal/intratracheal inoculation with a mixed virus preparation. Full-genome sequencing revealed that both pathotypes contained a deletion in the stalk region of the neuraminidase protein. We identified additional mutations in HA and polymerase basic protein 1 (PB1) in the HPAI virus, which were already present as minority variants in the LPAI virus population. Our findings provide more insight into the molecular changes and mechanisms involved in the emergence and selection of HPAI viruses.IMPORTANCE Low-pathogenicity avian influenza (LPAI) viruses circulate in wild birds and can be transmitted to poultry. LPAI viruses can mutate to become highly pathogenic avian influenza (HPAI) viruses causing severe disease and death in poultry. Little is known about this switch to high pathogenicity. We isolated an LPAI H7N3 virus from an infected turkey farm and showed that this contains small amounts of HPAI virus. The HPAI virus rapidly outcompeted the LPAI virus in chickens that were experimentally infected with this mixture of viruses. We analyzed the genome sequences of the LPAI and HPAI viruses and identified several changes that may be important for a virus to become highly pathogenic. This knowledge may be used for timely identification of LPAI viruses that pose a risk of becoming highly pathogenic in the field.