Xanthomonas albilineans is the bacterium responsible for leaf scald, a lethal disease of sugarcane. Within the Xanthomonas genus, X. albilineans exhibits distinctive genomic characteristics including the presence of significant genome erosion, a non-ribosomal peptide synthesis (NRPS) locus involved in albicidin biosynthesis, and a type 3 secretion system (T3SS) of the Salmonella pathogenicity island-1 (SPI-1) family. We sequenced two X. albilineans-like strains isolated from unusual environments, i.e., from dew droplets on sugarcane leaves and from the wild grass Paspalum dilatatum, and compared these genomes sequences with those of two strains of X. albilineans and three of Xanthomonas sacchari. Average nucleotide identity (ANI) and multi-locus sequence analysis (MLSA) showed that both X. albilineans-like strains belong to a new species close to X. albilineans that we have named Xanthomonas pseudalbilineans. X. albilineans and X. pseudalbilineans share many genomic features including (i) the lack of genes encoding a hypersensitive response and pathogenicity type 3 secretion system (Hrp-T3SS), and (ii) genome erosion that probably occurred in a common progenitor of both species. Our comparative analyses also revealed specific genomic features that may help X. albilineans interact with sugarcane, e.g., a PglA endoglucanase, three TonB-dependent transporters and a glycogen metabolism gene cluster. Other specific genomic features found in the X. pseudalbilineans genome may contribute to its fitness and specific ecological niche.