Bacteria serologically related to Leifsonia xyli ssp. xyli, the causal bacterium of ratoon stunting disease (RSD) in sugarcane, were detected using the fluorescent antibody direct count on filter (FADCF) technique in grasses in eastern Australia. In a survey of 191 grass, sedge and bullrush samples comprising 53 plant species, 90 (47%) of the samples tested harboured bacteria which reacted positively with L. xyli ssp. xyli polyclonal antiserum. A total of 18 grass species was found to be naturally colonised with bacteria serologically related to and morphologically similar to L. xyli ssp. xyli. Grasses colonised by these L. xyli-like bacteria were present in areas both adjacent to, and removed from, sugarcane crops. When L. xyli-like bacteria from Rhodes grass (Chloris gayana) were inoculated into sugarcane, they multiplied at a lower rate than L. xyli ssp. xyli. L. xyli-like bacteria in Rhodes grass were isolated in axenic culture and exhibited growth rates, colony size and pigmentation similar to those of L. xyli ssp. cynodontis, a bacterial pathogen of Cynodon dactylon (couch grass). Further, using a polymerase chain reaction (PCR) test that could differentiate L. xyli spp. xyli from L. xyli spp. cynodontis, the L. xyli-like bacteria infecting Rhodes grass, couch grass and panic grass (Panicum maximum) generated a product of the same size as L. xyli spp. cynodontis. We conclude that L. xyli ssp. cynodontis or closely related bacteria are common endophytes of grasses in eastern Australia.