Avian influenza viruses (AIVs) cause major global economic losses and pose a significant zoonotic threat. Their segmented genome facilitates reassortment, enabling the rapid emergence of novel genotypes. During the ongoing clade 2.3.4.4b H5N1 epizootic, over 90 H5Nx genotypes have been detected across Europe and the UK, though only a fraction of these have been detected as dominant genotypes. In recent years, H5N1 genotypes AB and BB have been most frequently detected, showing ecological divergence, with AB being mainly detected in waterfowl and BB predominantly being detected in gull species, though the functional significance remains unclear. Both have also spilled over into poultry. We assessed the functional fitness of these two dominant genotypes in ducks, as representatives of wild waterfowl, and chickens, as a key poultry species. Single infections were undertaken in both hosts, and coinfections in ducks were used to explore competitive fitness and reassortment dynamics. Novel bioinformatics approaches were developed to track within-host selection. To simulate natural transmission, a duck–duck–chicken infection chain was established. Genotype AB reached higher viral titres, was more pathogenic, and transmitted more efficiently in ducks, whereas BB showed enhanced transmissibility and delayed mortality in chickens. These phenotypes correlated with in vitro replication kinetics in duck and chicken embryonic fibroblast cells. Coinfected ducks supported complete transmission, but AB consistently dominated, with no evidence of reassortment in excreted material. These results demonstrate that genotype AB possesses greater fitness in waterfowl than BB, highlighting the influence of host species in shaping H5N1 transmission and poultry incursions.