The development of mathematical approaches to the study of microbial ecology has most often been limited to mean field studies of predator-prey interactions with a fixed or limited number of species. However, there is an incredible bacterial and viral diversity in natural systems that is neither well understood nor systematically identified. In this talk, I propose a computational and theoretical framework for analyzing rapid co-evolutionary dynamics in their ecological context. The aim of such a framework is to predict and test the dynamics of bacteria and bacteriophage diversity in ecosystems where both the molecular biology and population dynamics are well quantified. The model system under consideration is the association between E. coli and lambda phage in continuous culture. Because lambda phage inserts its prophage into the bacterial cell via the maltose receptor, a selective pressure exists for the bacteria to modify its receptor configuration and, in turn, for the phage to modify its tail fiber. A mathematical model of these trait adaptations is developed using the framework of adaptive dynamics (Dieckmann and Law, J. Math. Bio. 1996). Analytical solutions of the co-evolutionary model yield conditions for evolutionary bifurcations leading to distinct quasispecies, conditions that depend on ecological conditions and biological traits. The existence of bifurcations leading to stable coexistence of multiple quasispecies is verified by stochastic Monte Carlo simulations of populations evolving in a chemostat with fixed washout rate and inflow resource density. A necessary condition for bifurcations is for the host-range specificity of phage to exceed the specificity of bacteria at uptake of maltose, i.e. diversification occurs for generalist hosts and specialist phage. Finally, I discuss means to test quantitatively the predictions of this model under chemostat conditions.