Olive leprosy, caused by the fungus Phlyctema vagabunda, is a classic fruit rot disease widespread in the Mediterranean basin. From 2009 to 2013, new disease symptoms consisting of small circular necrotic leaf lesions, coin branch canker and shoot dieback were observed in Spanish and Portuguese olive orchards showing intense defoliation. Phlyctema‐like anamorphs were consistently isolated from leaves and shoots with symptoms. Representative isolates from affected leaves, shoots and fruits were characterized based on morphology of colonies and conidia, optimum growth temperature and comparison of DNA sequence data from four regions: ITS, tub2, MIT and rpb2. In addition, pathogenicity tests were performed on apple and olive fruits, and on branches and leaves of olive trees. Maximum mycelial growth rate ranged between 0.54 and 0.73 mm per day. Conidia produced on inoculated apple fruits showed slight differences in morphology among the representative fungal isolates evaluated. Phylogenetic analysis clustered all of the Phlyctema‐like isolates in the same clade, identifying them as Phlyctema vagabunda. On fruits, influence of wounding, ripening and cultivar resistance was studied, with cv. Blanqueta being the most susceptible cultivar. On branches, a mycelial‐plug inoculation method reproduced olive leprosy symptoms and caused shoot dieback. On leaves, Koch's postulates were fulfilled and the pathogen caused characteristic necrotic spots and plant defoliation. This is the first time that the pathogenicity of P. vagabunda in olive leaves has been demonstrated.