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Ratoon stunt, caused by the bacterium Leifsonia xyli subsp. xyli, is one of the major sugarcane diseases worldwide. The objectives of this study were to determine the variation in morphology and DNA sequence of L. xyli subsp. xyli strains isolated in China, to compare the changes that occurred in vascular ultrastructure and levels of endogenous hormone abscisic acid (ABA), auxins (indoleacetic acid [IAA]), and gibberellic acids (GA3) in sugarcane stalks. Experiments were also conducted with two sugarcane varieties, ‘ROC22’ and ‘Badila’, in the greenhouse to understand the cytological and physiological mechanisms of L. xyli subsp. xyli–induced growth stunting. There were three treatments in the experiments: (i) healthy plants (L. xyli subsp. xyli–free plants), (ii) infected plants (L. xyli subsp. xyli–infected seedcanes treated with hot water, and (iii) infected plants (healthy seedcanes dipped in L. xyli subsp. xyli cell culture). The results showed that sequence coverage of a locally isolated strain, LxxGXBZ01, was 99.99%, and the average nucleotide identity between LxxGXBZ01 and the other well-characterized Brazilian isolate LxxCTCB07 was 93.61%. LxxGXBZ01 occurred in different sizes and shapes in xylem vessels of infected plants. In comparison with healthy stalks, the secondary walls of the vessel element in L. xyli subsp. xyli–infected stalks were degraded with uneven wall thickness, deformities, sticky substances, and electron-dense substances accumulated inside the cells. Compared with the healthy and hot-water treatments, the contents of IAA and GA3 were significantly lower, while that of ABA was significantly higher in the L. xyli subsp. xyli–infected stalks. The information obtained in this study will expand our understanding of ratoon stunt etiology and cytological and physiological bases of the disease manifestation.