The fungus Stemphylium lycopersici (S. lycopersici) is an economically important plant pathogen that causes grey leaf spot disease in tomato. However, functional genomic studies in S. lycopersici are lacking, and the factors influencing its pathogenicity remain largely unknown. Here, we present the first example of genetic transformation and targeted gene replacement in S. lycopersici. We functionally analyzed the NLP gene, which encodes a necrosis- and ethylene-inducing peptide 1 (Nep1)-like protein (NLP). We found that targeted disruption of the NLP gene in S. lycopersici significantly compromised its virulence on tomato. Moreover, our data suggest that NLP affects S. lycopersici conidiospore production and weakly affects its adaptation to osmotic and oxidative stress. Interestingly, we found that NLP suppressed the production of reactive oxygen species (ROS) in tomato leaves during S. lycopersici infection. Further, expressing the fungal NLP in tomato resulted in constitutive transcription of immune-responsive genes and inhibited plant growth. Through gene manipulation, we demonstrated the function of NLP in S. lycopersici virulence and development. Our work provides a paradigm for functional genomics studies in a non-model fungal pathogen system.