Background Biopesticides based on strains of the bacterium Bacillus thuringiensis (Bt) are used globally for effective and environmentally friendly pest control. The most serious threat to the sustainable use of these microbial pesticides is the development of resistance on targeted pests. Populations of Plutella xylostella (diamondback moth) have evolved field resistance to Bt pesticides at diverse locations worldwide. Discovery of novel Bt strains with varied toxin profiles that overcome resistance is one of the strategies to increase sustainability of Bt pesticides against P. xylostella. In this study, we report isolation and characterization of a Bt strain named AB1 from Sri Lanka displaying toxicity towards larvae of P. xylostella resistant to the commercial Bt pesticide Dipel. Methods Strains of Bt from diverse environments in Sri Lanka were evaluated for protein crystal production through Differential Interference Contrast (DIC) microscopic examination, and for insecticidal activity against P. xylostella in bioassays. The genome of the AB1 strain was sequenced by Hiseq Illumina sequencing to identify the insecticidal genes present in the genome and nano liquid chromatography followed by tandem mass spectrometry (nanoLC/MS/MS) of purified crystal proteins of AB1 was performed to identify the expressed insecticidal proteins. Multilocus sequence typing and Gyrase B gene sequence analyses were performed to identify the phylogenetic origin of the AB1 strain. Results The AB1 strain was identified as producing high levels of bipyramidal crystals and displaying insecticidal activity against susceptible and Dipel-resistant strains of P. xylostella. Multilocus sequence typing and phylogenetic analysis of the Gyrase B gene identified that AB1 belongs to the B. thuringiensis subsp. aizawai serotype. Comparative analysis of genomic and proteomic data showed that among the insecticidal protein coding genes annotated from the AB1 genome (cry1Aa, cry1Ca, cry1Da, cry1Ia, cry2Ab and cry9), Cry1Ca and Cry1Da toxins represented most of the toxin fraction in parasporal crystals from AB1. Overall findings warrant further development of B. thuringiensis subsp. aizawai AB1 strain as a pesticide to control P. xylostella.