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• Disputed mutations were found in 21.9% of strains resistant to isoniazid alone, evidencing underestimation of multi-drug resistance. • 73.4% of multi-drug-resistant cases were linked to ongoing transmission events. • Intracluster acquisition of novel drug-resistance mutations was found, revealing important amplification of resistance. Genomic-based surveillance on the occurrence of drug resistance and its transmission dynamics has emerged as a powerful tool for the control of tuberculosis (TB). A whole-genome sequencing approach, phenotypic testing and clinical-epidemiological investigation were used to undertake a retrospective population-based study on drug-resistant (DR)-TB in Rio Grande do Sul, the largest state in Southern Brazil. The analysis included 305 resistant Mycobacterium tuberculosis strains sampled statewide from 2011 to 2014, and covered 75.7% of all DR-TB cases identified in this period. Lineage 4 was found to be predominant (99.3%), with high sublineage-level diversity composed mainly of 4.3.4.2 [Latin American and Mediterranean (LAM)/RD174], 4.3.3 (LAM/RD115) and 4.1.2.1 (Haarlem/RD182) sublineages. Genomic diversity was also reflected in resistance of the variants to first-line drugs. A large number of distinct resistance-conferring mutations, including variants that have not been reported previously in any other setting worldwide, and 22 isoniazid-monoresistant strains with mutations described as disputed in the rpoB gene but causing rifampicin resistance generally missed by automated phenotypic tests as BACTEC MGIT. Using a cut-off of five single nucleotide polymorphisms, the estimated recent transmission rate was 55.1%, with 168 strains grouped into 28 genomic clusters. The most worrying fact concerns multi-drug-resistant (MDR) strains, of which 73.4% were clustered. Different resistance profiles and acquisition of novel mutations intraclusters revealed important amplification of resistance in the region. This study described the diversity of M. tuberculosis strains, the basis of drug resistance, and ongoing transmission dynamics across the largest state in Southern Brazil, stressing the urgent need for MDR-TB transmission control state-wide. [ABSTRACT FROM AUTHOR]