Grain discoloration disease of rice is becoming a serious threat to rice crop in Karnataka. The spatio-temporal distribution of grain discoloration incidence in Kharif. Many fungi have been isolated from discolored grain, Curvularia lunata (Wakker) Boed. was found as a dominant pathogen. C. lunata recorded maximum growth and sporulation on potato dextrose agar and host seed extract with mean colony diameter of 90.00 mm followed by host leaf extract (89.53 mm). Similarity coefficient of twelve isolates of C. lunata based on RAPD analysis ranged from 39 to 66 per cent. Maximum similarity of 66% was observed between isolates Cl-14 and Cl-3. UV, IR, HNMR and MASS spectra were employed to establish the structure of isolated fungal toxin which indicated that it is a derivative of -beta dehydrocurvularin from C. lunata. The bioassay of toxin was carried out at different concentrations and least seed germination of 11.57 per cent was observed at 3500 ppm concentration.