In order to establish disease, plant pathogens exploit effectors as molecular tools that manipulate host processes to support host colonization. Verticillium dahliae is a soil-borne fungal pathogen that causes vascular wilt disease in hundreds of dicotyledonous species. For particular hosts, V. dahliae isolates have been grouped in pathotypes based on differential aggressiveness. Based on their disease phenotypes, V. dahliae strains are typically assigned to the defoliating or the non-defoliating pathotype on cotton. A single V. dahliae effector, named the D effector, was previously demonstrated to be necessary and sufficient for the induction of defoliation by strains of the defoliating pathotype, and to act as pathogenicity determinant on this host, as well as on the model plant Arabidopsis thaliana. Thus far, the mechanism underlying D effector activity remains unknown. In this study, we used heterologously produced effector protein to investigate biochemical properties of the D effector in planta. Effector infiltration in cotton cotyledons induced yellowing, vein browning as well as necrosis, and transcript profiling showed that photosynthesis was strongly repressed, while secondary metabolism and response to stress were induced in infiltrated cotyledons. These observations indicate that the D effector triggers stress responses in cotton. In addition, we examined the effect of the D protein in cotton tissues at cellular level. Cells exhibiting reticulate cell wall reinforcements typical of tracheary elements were observed adjacent to xylem vessels and even on the epidermis, suggesting that the D effector induces ectopic xylem differentiation.