Highly pathogenic (HP) avian influenza virus (AIV) H7N3 outbreaks occurred 3 times in the Americas in the past 10 years and caused severe economic loss in the affected regions. In June/July 2012, new HP H7N3 outbreaks occurred at commercial farms in Jalisco, Mexico. Outbreaks continued to be identified in neighbouring states in Mexico till August 2013. To explore the origin of this outbreak, time resolved phylogenetic trees were generated from the eight segments of full-length AIV sequences in North America using BEAST. Location, subtype, avian host species and pathogenicity were modelled as discrete traits upon the trees using continuous time Markov chains. A further joint analysis among segments was performed using a hierarchical phylogenetic model (HPM) which allowed trait rates (location, subtype, host species) to be jointly inferred across different segments. The complete spatial diffusion process was visualised through virtual globe software. Our result indicated the Mexico HP H7N3 originated from the large North America low pathogenicity AIV pool through complicated reassortment events. Different segments were contributed by wild waterfowl from different N. American flyways. Five of the eight segments (HA, NA, NP, M, NS) were introduced from wild birds migrating along the central North American flyway, and PB2, PB1 and PA were introduced via the western North American flyway. These results highlight a potential role for Mexico as a hotspot of virus reassortment as it is where wild birds from different migration routes mix during the winter.