The molecular mechanism by which bacterial avirulence genes mediate recognition by resistant host plants has been enigmatic for more than a decade. In this paper we provide evidence that the Xanthomonas campestris pv. vesicatoria avirulence protein AvrBs3 is recognized inside the plant cell. Transient expression of avrBs3 in pepper leaves, using Agrobacterium tumefaciens for gene delivery, results in hypersensitive cell death, specifically on plants carrying the resistance gene Bs3. In addition, for its intracellular recognition, AvrBs3 requires nuclear localization signals that are present in the C-terminal region of the protein. We propose that AvrBs3 is translocated into plant cells via the Xanthomonas Hrp type III secretion system and that nuclear factors are involved in AvrBs3 perception.