Background: Sheath rot disease caused by Sarocladium oryzae is an emerging threat for rice cultivation at global level. However, limited information with respect to genomic resources and pathogenesis is a major setback to develop disease management strategies. Considering this fact, we sequenced the whole genome of highly virulent Sarocladium oryzae field isolate, Saro-13 with 82x sequence depth. Results: The genome size of S. oryzae was 32.78 Mb with contig N50 18.07 Kb and 10526 protein coding genes. The functional annotation of protein coding genes revealed that S. oryzae genome has evolved with many expanded gene families of major super family, proteinases, zinc finger proteins, sugar transporters, dehydrogenases/reductases, cytochrome P450, WD domain G-beta repeat and FAD-binding proteins. Gene orthology analysis showed that around 79.80 % of S. oryzae genes were orthologous to other Ascomycetes fungi. The polyketide synthase dehydratase, ATP-binding cassette (ABC) transporters, amine oxidases, and aldehyde dehydrogenase family proteins were duplicated in larger proportion specifying the adaptive gene duplications to varying environmental conditions. Thirty-nine secondary metabolite gene clusters encoded for polyketide synthases, nonribosomal peptide synthase, and terpene cyclases. Protein homology based analysis indicated that nine putative candidate genes were found to be involved in helvolic acid biosynthesis pathway. The genes were arranged in cluster and structural organization of gene cluster was similar to helvolic acid biosynthesis cluster in Metarhizium anisophilae. Around 9.37 % of S. oryzae genes were identified as pathogenicity genes, which are experimentally proven in other phytopathogenic fungi and enlisted in pathogen-host interaction database. In addition, we also report 13212 simple sequences repeats (SSRs) which can be deployed in pathogen identification and population dynamic studies in near future. Conclusions: Large set of pathogenicity determinants and putative genes involved in helvolic acid and cerulenin biosynthesis will have broader implications with respect to Sarocladium disease biology. This is the first genome sequencing report globally and the genomic resources developed from this study will have wider impact worldwide to understand Rice-Sarocladium interaction.