Rice blast caused by Magnaporthe oryzae is one of the most destructive diseases of rice worldwide. The fungal pathogen is notorious for its ability to overcome host resistance. To better understand its genetic variation in nature, we sequenced the genomes of two field isolates, Y34 and P131. In comparison with the previously sequenced laboratory strain 70-15, both field isolates had a similar genome size but slightly more genes. Sequences from the field isolates were used to improve genome assembly and gene prediction of 70-15. Although the overall genome structure is similar, a number of gene families that are likely involved in plant-fungal interactions are expanded in the field isolates. Genome-wide analysis on asynonymous to synonymous nucleotide substitution rates revealed that many infection-related genes underwent diversifying selection. The field isolates also have hundreds of isolate-specific genes and a number of isolate-specific gene duplication events. Functional characterization of randomly selected isolate-specific genes revealed that they play diverse roles, some of which affect virulence. Furthermore, each genome contains thousands of loci of transposon-like elements, but less than 30% of them are conserved among different isolates, suggesting active transposition events in M. oryzae. A total of approximately 200 genes were disrupted in these three strains by transposable elements. Interestingly, transposon-like elements tend to be associated with isolate-specific or duplicated sequences. Overall, our results indicate that gain or loss of unique genes, DNA duplication, gene family expansion, and frequent translocation of transposon-like elements are important factors in genome variation of the rice blast fungus.