Pantoea ananas is described for the first time in Australia as a pathogen of rice (Oryza sativa). Necrotic lesions occurred on the rachis and stem, extending into the flag leaf sheath and stopping at the second node. Lesions were often observed on the flag leaf sheath near the collar. Affected stems were weaker than those on plants not displaying symptoms. Infection was most noticeable in, but not restricted to, lines with the Californian cv. M201 in recent lineage. Isolates were identified by fatty acid analysis, biochemical tests and 16s rDNA analysis. There was a significant effect of disease symptoms on percentage of whole grain remaining after milling and the yellowness index. This is the first report of P. ananas affecting grain quality. The unseasonably hot, dry and windy conditions prevailing in the 2002'2003 growing season is thought to have aggravated disease severity.