In comparison to dicot-infecting bacteria, only limited numbers of genome sequences are available for monocot-infecting and in particular cereal-infecting bacteria. Herein we report the characterisation and genome sequence of Xanthomonas translucens isolate DAR61454 pathogenic on wheat and barley. Based on phylogenetic analysis of the ATP synthase beta subunit (atpD) gene, DAR61454 is most closely related to other X. translucens strains and the sugarcane- and banana- infecting Xanthomonas strains, but shares a type III secretion system (T3SS) with X. translucens pv. graminis and more distantly related xanthomonads. Assays with an adenylate cyclase reporter protein demonstrate that DAR61454's T3SS is functional in delivering proteins to wheat cells. X. translucens DAR61454 also encodes two type VI secretion systems with one most closely related to those found in some strains of the rice infecting strain X. oryzae pv. oryzae but not other xanthomonads. Comparative analysis of 18 different Xanthomonas isolates revealed 84 proteins unique to cereal (i.e. rice) infecting isolates and the wheat/barley infecting DAR61454. Genes encoding 60 of these proteins are found in gene clusters in the X. translucens DAR61454 genome, suggesting cereal-specific pathogenicity islands. However, none of the cereal pathogen specific proteins were homologous to known Xanthomonas spp. effectors. Comparative analysis outside of the bacterial kingdom revealed a nucleoside triphosphate pyrophosphohydrolase encoding gene in DAR61454 also present in other bacteria as well as a number of pathogenic Fusarium species, suggesting that this gene may have been transmitted horizontally from bacteria to the Fusarium lineage of pathogenic fungi. This example further highlights the importance of horizontal gene acquisition from bacteria in the evolution of fungi.