Comparative analyses of pathogen genomes provide new insights into how pathogens have evolved common and divergent virulence strategies to invade related plant species. Fusarium crown and root rots are important diseases of wheat and barley world-wide. In Australia, these diseases are primarily caused by the fungal pathogen Fusarium pseudograminearum. Comparative genomic analyses showed that the F. pseudograminearum genome encodes proteins that are present in other fungal pathogens of cereals but absent in non-cereal pathogens. In some cases, these cereal pathogen specific genes were also found in bacteria associated with plants. Phylogenetic analysis of selected F. pseudograminearum genes supported the hypothesis of horizontal gene transfer into diverse cereal pathogens. Two horizontally acquired genes with no previously known role in fungal pathogenesis were studied functionally via gene knockout methods and shown to significantly affect virulence of F. pseudograminearum on the cereal hosts wheat and barley. Our results indicate using comparative genomics to identify genes specific to pathogens of related hosts reveals novel virulence genes and illustrates the importance of horizontal gene transfer in the evolution of plant infecting fungal pathogens. Cereals are our most important staple crops and are subject to attack from a diverse range of fungal pathogens. A major goal of molecular plant pathology research is to understand how pathogens infect plants to allow the development of durable plant protection measures. Comparing the genomes of different pathogens of cereals and contrasting them to non-cereal pathogen genomes allows for the identification of genes important for pathogenicity toward these important crops. In this study, we sequenced the genome of the wheat and barley pathogen F. pseudograminearum responsible for crown and root-rot diseases, and compared it to those from a broad range of previously sequenced fungal genomes from cereal and non-cereal pathogens. These analyses revealed that the F. pseudograminearum genome contains a number of genes only found in fungi pathogenic on cereals. Some of these genes appear to have been horizontally acquired from other fungi and, in some cases, from plant associated bacteria. The functions of two of these genes were tested by creating strains that lacked the genes. Both genes had important roles in causing disease on cereals. This work has important implications for our understanding of pathogen specialization during the evolution of fungal pathogens infecting cereal crops.