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Background Recent studies have demonstrated that natural transformation and the formation of highly structured populations in bacteria are interconnected. In spite of growing evidence about this connection, little is known about the dynamics of natural transformation in spatially structured bacterial populations. Results In this work, we model the interdependency between the dynamics of the bacterial gene pool and those of environmental DNA in space to dissect the effect of transformation on adaptation. Our model reveals that even with only a single locus under consideration, transformation with a free DNA fragment pool results in complex adaptation dynamics that do not emerge in previous models focusing only on the gene shuffling effect of transformation at multiple loci. We demonstrate how spatial restriction on population growth and DNA diffusion in the environment affect the impact of transformation on adaptation. We found that in structured bacterial populations intermediate DNA diffusion rates predominantly cause transformation to impede adaptation by spreading deleterious alleles in the population. Conclusion Overall, our model highlights distinctive evolutionary consequences of bacterial transformation in spatially restricted compared to planktonic bacterial populations. [ABSTRACT FROM AUTHOR]